With residential electric bills expected to rise about $80 a month in January, Gov. Ned Lamont announced an agreement with Eversource and United Illuminating that could shave off about $10 a month from that hike by drawing on cost-savings from the state’s contract with the Millstone Nuclear Power Station in Waterford.
In a press conference on Monday in Hartford, Lamont said he had worked through the holiday to reach a deal with the state’s two largest energy providers to limit the massive supply rate increases expected in January.
“I said, ‘Look, the taxpayers and the ratepayers are giving up a lot in the complicated times in which we live,’ – what that means going into a cold winter, what that means in terms of home heating, what that means in terms of gasoline, what that means in terms of electricity,” Lamont said. “‘I want you [energy companies] to come forward as well.’”
The utilities and state officials have made efforts in recent days to point out that the companies, while profitable, simply pass along the cost of generating electricity, and don’t profit from the hike.
According to Lamont, the $10-a-month bill credit for Eversource customers will be paid for by accelerating the savings from their contracts to buy power from the Millstone Nuclear Power Station. At $49.99 per megawatt-hour, the contracted cost of Millstone’s electricity is currently lower than the market price of electricity in natural-gas-dominated New England, where the price of electricity averaged $61.38 in September. Customers have been benefiting from that price differential since a rate adjustment in September that returned more than $200 million to customers, and lowered the bill of the average Eversource residential customer by about $9.78 per month and the average United Illuminating customer by about $7.72 a month.
Department of Energy and Environmental Protection Commissioner Katie Dykes said there is now about another $90 million in savings from the Millstone contract to return to customers, and Eversource and UI are proposing to return that saving more quickly, saving Eversource customers about another $10 a month starting Jan. 1. The impact for United Illuminating customers has not yet been calculated, and PURA would need to approve the plan before it takes effect.
Dykes said the fixed-rate contracts like Millstone’s act as a “hedge” the volatile prices of an electric market largely fueled by natural gas-fired power plants. If the market price is higher than the price of the fixed-rate contracts like it is now, the revenue generated by the price difference goes back to the customers, Dykes said.
“Part of the reason [for these contracts] is to solve things like climate change,” Dykes said. “But also to provide a hedge against the volatility of this fossil fuel roller coaster.”
Eversource has also pledged to provide $10 million of shareholder money to Operation Fuel – a program that is meant to assist people who don’t qualify for state assistance – which had been concerned about demand for heating assistance overwhelming their limited funds.
“We know how challenging increased energy costs are for our customers, especially during these times, and want to do everything we can to help,” Eversource Connecticut President Steve Sullivan said in a statement. “As an energy delivery company, we can’t control the cost of electricity on the supply side of our customer bills, but it is critically important to us to uncover any and all options to provide relief for our customers.”
Lamont said he is still in discussions with United Illuminating to provide shareholder money for relief. He noted that its parent company Avangrid will pay Operation Fuel $3 million as part of a settlement over state regulator claims that the company didn’t properly screen customers to see whether they qualified for hardship status. PURA also ordered Avangrid in November to pay Operation Fuel another $4.5 million after determining that the company continued to send customers to collections for utility debts while the state had a moratorium on utility shut offs due to COVID. Avangrid has contested that fine.
Attorney General William Tong, who did not participate in the press conference with Lamont, said in a statement that he has asked Eversource to contribute roughly another $40 million, and for United Illuminating to contribute another $8 million to provide more relief for customers.
“To date, they have refused,” Tong said. “Absent that, we are left with solutions that provide only modest relief, and are paid for by and large by the very same taxpayers and ratepayers already crushed by this crisis. That is both frustrating and unacceptable. This filing must be the start of our search for relief, not the end. Taxpayers and ratepayers are contributing to these solutions, and so too should the shareholders and executives who have done so well over the past several years.”
Tong said that while Eversource and United Illuminating don’t profit directly from supply rates, both companies were earning a “healthy profit” on their investments in distribution and transmission systems.
Eversource earned a $1.2 billion profit in 2021, and reported earnings of $1.08 billion in the first three quarters of 2022 – about 19 percent higher than its first three quarters of revenue last year. Avangrid reported a profit of $707 million in 2021, and $734 million for the first nine months of 2022 – about 35 percent higher than the first three quarters of 2021.
“While they are not directly responsible for the latest spike in winter supply rates, they are undeniably in a strong position to assist,” Tong said.
When asked by CT Examiner in a recent interview why United Illuminating can’t use some of its profits to offset the supply cost increases, Avangrid Networks President and CEO Catherine Stempien said the company’s profits are “very modest” compared to the profits of power generators, and they need those profits to draw outside investors.
“We have a modest business with modest growth,” Stempien said. “We need to attract capital from the markets in order to make sure that the investments we make on behalf of our customers can get financed.”