Electricity Ratepayers Continue to Pay Price for Poor Infrastructure

Reducing energy costs is essential to improving the economic competitiveness of Connecticut and New England, and one of the key factors to lower costs is having a reliable, modern, and sufficient infrastructure to bring nearby supplies of natural gas and electricity to the state and region.

The critical link between infrastructure and cost was demonstrated again this week when the state’s Public Utilities Regulatory Authority (PURA) approved significant rate increases to energy bills due to an increase in the cost utility companies must pay for the electricity they provide to their customers. (PURA is expected to decide by mid-December on the other, non-generation aspects of the CL&P docket.)

Why the increase in this so-called generation charge? Because the utilities are having to pay more for the energy they purchase from generators that operate in New England. And the main reason they’re paying more for the natural gas is our region’s insufficient pipeline capacity.

Until Connecticut and New England gets the natural gas pipeline infrastructure we need to bring low-priced natural gas that is close to the region, and until we take advantage of nearby, plentiful sources of clean and affordable energy—such as zero-emission, lower-cost hydroelectric power being generated in Quebec—we’ll continue to pay a steep penalty.

Plus, our region will continue to trail economically behind other parts of the country that are benefitting from similar energy opportunities.

What’s more, the lack of gas infrastructure is leading not only high energy prices, especially during the winter months, but this lack of infrastructure could also impact businesses using natural gas obtained under “interruptible” contracts with suppliers. Interruptible contracts allow suppliers to temporarily shut off gas to these business customers if there is not enough of it to supply gas-fired power plants.  

Good News, Bad News

Fortunately, utility companies and many public officials in Connecticut are working feverishly to ensure the much-needed pipeline and electricity transmission infrastructure is built. 

However, they face rigid opposition from others who see infrastructure expansion as harmful to the economic viability certain other low- or zero-emission energy sources, such as wind and solar power. These sources are generally more expensive and less reliable due to their dependency on specific weather conditions.

It’s an unfortunate debate, according to Eric Brown, CBIA’s director of energy and environmental policy.

“Renewables like solar, fuel cells and wind have a definite role in the marketplace and Connecticut’s energy future,” he said. “They bring electric power right to the customer. And without the need for distribution lines, they are attractive from a public relations standpoint in that they foster a ‘green’ image which, for businesses, can mean attracting customers as well as employees, and their costs are coming down making them more affordable for some customers.”

However, from the perspective of global competitiveness and the health of Connecticut’s economy, building the infrastructure needed to access adequate supplies of nearby natural gas and hydropower is an economic imperative. 

Transformation Ahead

The potential to drastically transform Connecticut’s competitive position for energy is there, said Brown. “Gas and hydropower, combined with homegrown generation of zero-emission nuclear power and, when needed, energy from one of the cleanest coal-fired power plants in the country, and the growing availability of renewable power powered by solar, fuel cells, biomass, and wind, can create a highly reliable, affordable, and competitive portfolio.”   

In the meantime, Brown urges companies to work with their utilities to take advantage of a variety of energy efficiency and clean energy financial incentives, and to contact CBIA’s Tom Guerra (860.244.1160) to find out about CBIA’s Energy Connections program, that is helping hundreds of businesses throughout Connecticut save on their energy bills.

For more information, contact CBIA’s Eric Brown at 860.244.1926 | eric.brown@cbia.com | @CBIAericb