Why does Connecticut have high energy costs and what can be done to reduce them? State legislators this week invited Chairman Kevin DelGobbo of the state’s Department of Public Utility Control (DPUC) to sort out the mechanics of electric rates and understand how energy policy choices should be made.

Behind the talks were Connecticut’s continually high energy costs—including the third-highest electricity rates in the U.S. as of August, 2010. DelGobbo brought good news, however—Connecticut’s electric rates have been declining the last few years and are expected to continue to decline in 2011. The decline is attributed to the drop and stabilization of natural gas prices. Natural gas is the commodity that drives Connecticut’s electricity rates.

DelGobbo highlighted the four main components in electric bills: electricity generation, transmission, distribution, and other factors including public policy decisions. Lawmakers have the most control over the “other” component, which accounts for approximately 9% of consumers’ average monthly bill. Last year, while complaining about Connecticut’s high electric prices, legislators chose to balance the state’s budget deficit through electric ratepayers. Lawmakers kept in place a surcharge that was scheduled to expire for Connecticut Light & Power customers this year and United Illuminating customers, and used it as a revenue source to pay off borrowed money to close the budget deficit. They also raided a portion of the state’s Energy Efficiency Fund to help balance the budget deficit.

DelGobbo said state energy policy needs a priority focus: on reducing electric rates, reducing overall electric costs, increasing environmental benefits or increasing economic development. Businesses will press lawmakers to focus on reducing overall electric costs to help employers create and keep jobs.

For more information contact Kevin Hennessy at 860.244.1900 or kevin.hennessy@cbia.com.