Businesses seeking more stability in
electricity rates

(April 21, 2006) With energy prices continuing to soar — in the last two weeks oil has been more than $70 a barrel, and natural gas prices have risen 10% — Connecticut’s businesses are concerned that more needs to be done to stabilize electricity rates, especially with a major change about to take place in how power is purchased.

Under current law, larger business customers in 2007 will be required to choose a competitive electricity supplier or accept supplier-of-last-resort (default) service from their power utility, which could carry significantly higher costs than the rates they are paying now.

Customers with a maximum demand of 500 kilowatts and who choose to remain with their utility will be subject to the default service. A strict interpretation of default service under Connecticut’s restructuring law could result in the costly monthly procurement of electricity and unnecessarily high electricity rates for large business customers.

Businesses would like to see the law clarified so that, at the very least default service is procured only semiannually to allow for greater rate stability in 2007.
That change will allow for greater price certainty for customers, yet still provide price signals that will help stimulate a competitive electricity marketplace for Connecticut.

Energy continues to be a major issue for Connecticut businesses. For the first time, energy costs have exceeded some companies’ payroll costs. And other businesses have designed production schedules that include closing on certain days specifically to avoid a full day of energy costs.

CBIA hopes to make the change to the existing restructuring law before the end of the session in order to provide businesses with more energy-cost stability.

For more information, contact CBIA’s Rob Earley at 860-244-1900 or
earleyr@cbia.com.