Questions continue to mount about increases in electricity delivery charges on Eversource bills of many Connecticut residents and businesses since July 1.
Eversource has pointed to a “variety of factors” leading to the increases, but legislators on the Energy and Technology Committee have requested that the Public Utilities Regulatory Authority (PURA) suspend the increase until a thorough review can be done.
According to Tricia Modifica, a spokesman for Eversource, “The biggest factor is the state energy policy that was passed by the state legislature in 2017 that requires Eversource and United Illuminating to purchase power from Millstone Nuclear Power Plant at higher cost for the next 10 years to keep Millstone running.”
Modifica said that the contract, which was created to keep Millstone operational, will add about $124 million to customers’ bills over the next six months.
“We tried to protect customers from these additional charges. We worked alongside AARP to argue against this policy change, but we were not successful and now we’re seeing the results of that,” said Modifica.
Modifica also pointed to other factors including increased transmission costs combined with lower-than-expected electricity consumption from January to June compared to last year, primarily due to milder weather conditions.
Millstone owner responds
Weezie Nuara, state policy director for New England for Dominion Energy, which owns Millstone, said in a July 27 letter to legislators that the Eversource price increase is due to “an increase in the transmission service rate charge and an increase in the nonbypassable federally mandated congestion cost (NBFMCC) charge.”
According to the Connecticut State Office of Consumer Counsel, customers must pay NBFMCC charges regardless of their energy supplier. The charges are considered “reliability related” and cover costs approved by the Federal Energy Regulatory Commission (FERC) and the Public Utility Regulatory Authority (PURA).
According to Naura, “the costs associated with Millstone’s power purchase agreements have been incorporated into the NBFMCC charge,” which “seeks recovery for 23 different services and programs approved by state and federal regulators.”
“The state’s contracts with Millstone are just one of those line items,” she wrote.
A bridge to carbon-free power
State Sen. Norm Needleman, D-Essex, who is chair of the Energy and Technology Committee, said the power purchase agreement between Dominion Energy and the utility companies was necessary to guarantee that the Millstone Nuclear Power Station would operate for 10 more years.
For some time Dominion had warned that it would close the plant because of increased operating costs and competition from natural gas. The plant produces 2,100 megawatts of “carbon-free power” and supplies 40 percent of Connecticut’s power and feeds the New England power grid.
“The plant had to be kept alive because we couldn’t lose the energy,” said Needleman.
State Rep. Holly Cheeseman, R-East Lyme, said the deal preserved a needed energy resource “and the 1500 jobs and $1.6 billion contribution to the Connecticut economy.”
The power purchase agreement guaranteed a flat rate of 4.999 cents/kWh for 10 years, “the lowest price for a carbon-free resource in Connecticut published to date and 32 percent lower than the lowest standard offer price ever from Eversource, which is 7.375 cents/kWh as of July 1,” wrote Ken Holt, Manager of Nuclear Fleet Communications – Dominion Energy, in a July 29 email.
Cheeseman released a statement saying that the state has a goal of a 100 percent zero-carbon electric sector by 2040 and that the power purchase agreement was a guarantee toward the state’s clean energy future.
“I am therefore saddened and disturbed that Eversource is attempting to blame this power purchase agreement for recent increases in customers’ bills. On the other hand, this is coming from a company whose years of deferred maintenance resulted in record power outages, and that attempted to pass on to Connecticut ratepayers the cost of building new natural gas pipelines,” she wrote. “It is telling that Eversource and the other two natural gas players in Connecticut were among the leading opponents of the power purchase agreement. The closure of Millstone would have left dirty natural gas as the only source of that baseload power. Carbon emissions would have increased by 4 million tons, about the equivalent of outing an additional 600,000 cars on the road each year.”
A 3.5% increase?
Cheeseman said that if an Eversource filing with PURA on June 19, 2020, is true then “it is impossible to believe Eversource’s assertion that bills have doubled because of the Dominion agreement.”
That filing pegs the July 1 rate change for a typical residential (Rate 1) Standard Service customer using 700 kWh per month at 3.5 % or $5.58 per month.”
“Perhaps it is time for Eversource to come clean about rate increases, rather than attempt to blame them on other parties,” she said. “I join colleagues’ call for a legislative hearing to demand real answers from Eversource, not more excuses.”
In contrast to Eversource, Cheeseman pointed to United Illuminating Company, which is owned by Avangrid, and serves about 335,000 customers in New Haven and Bridgeport. United Illuminating has not raised rates for consumers.
According to Ed Crowder, manager of media relations at Avangrid, however, United Illuminating also has an unresolved deficit of about $50 million.
“UI is down about $50 million, which is something we’re working on with PURA,” said Crowder. “To the extent that customers are reporting higher than expected bills, those are really a consequence of higher energy usage due to the hot weather and changes to how they’re living and working in the COVID era.”
Sen. Paul Formica, R-East Lyme, said he has questions about the Eversource increases, especially since United Illuminating has not raised its rates.
“It leaves me very suspicious as to the reason that Eversource is claiming Millstone is the reason for this large increase,” he said. “That’s why we want PURA to ask the hard questions and we want Eversource to come out and tell the truth.”
Formica said that the leaders of the Energy and Technology Committee as well as the leaders of all four caucuses had signed a letter to PURA asking for suspension of the Eversource rate increases.
“We will hold a hearing or public information session. I got a commitment from the energy leadership to hold that hearing and to get Eversource and UI to explain their comments,” he said.
According to Formica, the Millstone agreement was the result of years of trying and failing to bring in natural gas lines and transmission lines from hydropower in Canada, leaving few options for generating or obtaining electrical power for Connecticut.
“The reason we attempted all those things was the shortage of natural gas that created such a huge price spike in the cold winters that it negated any savings it provided the rest of the year,” he said. “So we had to do something different and by securing the energy at Millstone for a 10 year period, it gives us the opportunity to develop the next generation of energy generation, which in this case would be offshore wind.”
Long term infrastructure improvement for Connecticut would be next to impossible without Millstone producing power, said Formica.
“When you look at how long it takes to build infrastructure, we got to get moving and we’ve got to get it now,” he said.