State regulators are hoping that redesigned electric bills will better explain to customers what’s actually driving the high cost of electricity in Connecticut and lead to a more productive public conversation about the issue.
In a unanimous decision on Wednesday morning, the board of the Public Utilities Regulatory Authority ordered Eversource and United Illuminating – which serve over 1.5 million electric customers in Connecticut – to overhaul their electric bills and better explain what is behind the often opaque terminology used to describe the many components of electric rates.
Eversource redesigned its bills in 2016, but United Illuminating hasn’t significantly changed its bills in over 20 years, according to PURA. The authority directed the two companies to develop new bills that are similar to each other.
One of the most significant changes ordered by state regulators is that costs should be grouped into four categories instead of as “supply” and “delivery” categories currently used for billing.
Those categories will be split into supply, transmission, local delivery and public policy costs – with an optional fifth category for miscellaneous charges like security deposits and late payments.
Each category would be described with a uniform definition, including who is responsible for oversight of that charge.
“Transmission” would be explained as the “Cost to maintain high voltage towers and lines. Regulated by the Federal Energy Regulatory Commission. This charge is based on usage.” And “Local delivery” would be described as “”Cost of [company] to build, maintain, and repair the poles, lines, and meters that deliver power from the substation. Regulated by PURA.”
PURA also directed the companies to use uniform terms for the many components outlined in the line-item portion of the bill, and to break some down into smaller, more descriptive sub-categories. PURA said this change was especially important for vague components like “Combined Public Benefit Charge,” which contains several different public policies that drive rates.
“It is challenging to educate over 1.5 million customers about their electric bill, which is exacerbated by the inconsistent use of unfamiliar terminology and changes to that wording,” PURA said in its decision. “The consistent use of simplified terminology combined with improved grouping of line items for presentation on the bill will improve customer understanding and reduce dissatisfaction.”
Stephanie Keohane, supervisor of PURA’s Clean and Affordable Energy Unit, told the commission that during its review of the electric companies’ rates in 2020 the authority heard customer frustration about the “delivery” side of their electric bill.
A sharp and unexpected increase in electric bills in July 2020 caused outrage and confusion among many Connecticut electric customers. Much of that ire was directed at the state’s largest electric company, Eversource.
The company pointed to the state’s 2019 deal to keep Dominion Energy’s Millstone Nuclear Power Station operating. That Millstone deal looks better to customers now that the price of natural gas has spiked the average wholesale price of electricity in New England to $71.71 per megawatt hour, much higher than the $49.99 per-megawatt-hour price set in Millstone’s contract.
But in 2020, gas was cheap and the average wholesale price of electricity was just $21.71 per megawatt hour in New England, so the Millstone contract was an added cost to Eversource that was passed on to electric customers as part of the “Non-bypassable Federally Mandated Congestion Charge” on the delivery side of their bills.
That charge proved to be a sticking point in deliberations over the new bill categories, with various parties debating whether it belonged in “local delivery,” or if it was more accurate under the “public policy” banner. PURA settled on including it as “public policy,” but also directed the companies to split it into more specific subcategories in the detailed line-item of the bill.
Outrage over the cost pushed PURA to reverse the July 2020 rate hike it had approved for Eversource. PURA decided that, as the electric system is becoming more complex, with more expenses being recovered through various “reconciliation” or rate mechanisms, there was a need to make the bills easier for customers to understand, Keohane told the commission.
State regulators also began a review of the bills and how the bills could better explain what customers were paying for on each line item – like the cost of the regional transmission system, the cost of state renewable energy policies, or the cost of the supply of electricity.
It will take several months for Eversource and United Illuminating to redesign their bills and start sending the new bills to customers. The companies are supposed to submit mockups to PURA for review in September.
Commissioner John Betkoski said that, while the change won’t lower rates, it’s a positive step to explain to customers exactly what they’re paying and why.
“People are always coming to us to ask what is on their electric bill, ‘What am I paying for?’ and ‘How much am I paying for this?’” Betkoski said. “So hopefully this will make it clear.”
Commissioner Michael Caron and PURA Chair Marissa Gillett said they hoped a more transparent bill would make it easier to start conversations about what is driving the high costs of Connecticut residents’ bills, and how to address the issue.
“Redesigning the bill is not in and of itself going to bring costs lower, but I think we do hope that the transparency that will be provided by these redesigned electric bills – particularly into the cost drivers – will help facilitate tough conversations about what should be funded through your electric bill, and when and why,” Gillett said.