Why Our Electricity Bills Are So High: A Breakdown
This article was originally published by CT Examiner, and co-authored by David Flemming.
On Oct. 24, Scott Pearson — a Monroe resident — hand-delivered a striking message to Gov. Ned Lamont and General Assembly lawmakers: a 68,000 signed, 1,500-page petition calling for an end to the Public Benefits Charge, which passes along to consumers the costs of the government mandates imposed on power companies for a variety of state energy policies, including “clean” energy.
The petition was launched this past July after he saw a Facebook post related to the Public Benefits Charge increase. Since then, he has sought a meeting with the governor, to no avail. Nevertheless, he hosted a press conference in the Legislative Office Building at the state Capitol in late October, saying the charge impacts the quality of life and forces tough financial decisions.
“The government has been disconnected with the middle class,” Pearson said. “Connecticut needs to throw out the public benefits playbook and find another way to fund projects that benefit all of Connecticut, not just on the backs of Eversource and [United Illuminating] rate payers, and not just to benefit [electric vehicle] infrastructures (battery chargers and exchange stations).”
Eversource or United Illuminating (UI) receive no profits from the Public Benefits Charge. To make matters worse, Connecticut’s families and businesses already pay one of the highest electric rates in the nation — and there is no doubt the increased charges will be a hotly-debated topic in the next legislative session this upcoming January.
There are several factors behind the dramatic spike in the Public Benefits Charge. Utility companies agreed to a “power purchase agreement” with Millstone Nuclear Power Plant, which cost ratepayers $297 million in 2023 to keep the plant operational. Meanwhile, during the pandemic, a moratorium on disconnecting people’s electricity cost $97 million in 2023. Every New England state rolled back this policy by July 2021 except Connecticut, which ended its moratorium only last May. Now, power companies are attempting to recoup their losses from a government mandate — to the detriment of responsible residents who paid on time.
If that wasn’t enough, the Public Utilities Regulatory Authority (PURA) approved a 0.3845 cents per kilowatt hour rate hike allowing Eversource and UI to recoup costs for electric vehicle (EV) charging grid enhancements and rebates, which mostly benefited some of the state’s wealthiest towns. Essentially, middle- to low-income residents are subsidizing the more affluent’s environmental awareness.
While the Public Benefits Charge is not the only expense on the average electric bill, it is the second highest, behind only the cost of generating power, according to a new Yankee Institute breakdown.
Within the Public Benefits Charge are four categories. The largest “slice” of Public Benefits (61%) relates to policies passed by the General Assembly related to green energy and efficiency programs (of which there are over 20), as well as programs for helping those unable to pay their electric bills. The second largest slice (26%) accounts for the nuclear power purchase agreements arranged by the General Assembly. The other charges (13%) were outside the control of the General Assembly, such as a federal mandate for renewable energy.
For an average household that consumes 700 kWh of electricity in a month, the Public Benefits Charge ends up costing nearly $60. Over the course of a year, that’s an extra $704 out of hard-working peoples’ pockets. For others, this could be more expensive, as Campbell’s bill alarmingly attests.
To provide relief, lawmakers should consider the following options: use some of the federal American Rescue Plan Act (ARPA) funds to bring down the rate increases; include hydro and nuclear power in Connecticut’s Renewable Portfolio Standard, allowing electricity providers to choose the lowest-cost sources of electricity generation available, rather than a mandatory minimum of expensive solar and wind power; require that Public Benefits Charges on electric bills be approved by the General Assembly; and restrict power purchase agreements to rates at or below 150% of the wholesale price for electricity, for wind, solar or nuclear.
As the winter season looms, Connecticut residents cannot afford a delay in action. Environmental goals are admirable, but state leaders must be mindful that many consumers are struggling economically, and energy policy must make sense for everyone’s bottom line.
Andrew Fowler is the Communications Specialist at Yankee Institute, a Connecticut-based free-market policy organization.
David Flemming is the former Director of Policy at Yankee Institute, a Connecticut-based free-market policy organization.