Need a good reason to switch suppliers? Did you know that Connecticut residents saved up to 46% on their electricity bills last year by switching their supplier? Yup it’s true! Connecticut residents are actually able to choose their own electricity provider. Join the more than 500,000 Connecticut residents who have already switched providers. Shop around for the best contract length, rate, and green energy mix
The History of Deregulation in Connecticut
In 1998, the Connecticut Legislature enacted PA 98-28, clearing the way for the state’s electricity customers to choose their own energy supplier. The law dismantled the old local monopoly framework and instead erected one capable of responding to both energy reliability rules set up by the Federal Energy Regulatory Commission (FERC) and provide Connecticut’s energy customers with lower prices. However, the Connecticut Municipal Electric Energy Cooperative (CMEEC) was left intact. Created by the state in 1976, CMEEC is a non-profit public power organization providing electric services to member and participating municipal utilities in Connecticut.
Unbundling and Divestiture
Under PA 98-28, the state’s two electric companies, Connecticut Light and Power (CL&P) and United Illumination Company (UI)were forced to change to electricity distribution companies (sometimes called “poles and wires”) and sell off their power generators, including their nuclear generator plants before January, 2000. This “unbundling” process was overseen by Connecticut’s Department of Public Utility Control (now known as the Public Utilities Regulatory Authority or PURA).
Both CL&P and UI were promised reimbursement through rate surcharges for their “stranded costs”, costs the companies paid to build power plants and related structures before deregulation began. As it went, both companies were able to complete sales of their generator assets in time. UI was even able to sell its generators at a profit and so was used to reduce the surcharge paid by consumers.
The Standard Service Offer
The law and subsequent revisions introduced a renewable portfolio standard requiring suppliers to obtain a percentage of their power from renewable resources. It outlined standardized billing and plan labeling to ease comparison by consumers. It also restructured Connecticut’s electricity rates. Two important requirements for the two utilities was to provide a standard service offer to consumers and that its service rate had to be at least 10% below the rates the companies charged on December 31, 1996.
The standard service offer is the basic generation supply option provided by CL&P and UI and is available to all residential and small business customers. Standard service rates are a direct pass-through for the electricity cost that CL&P and UI must pay to buy generation for their customers. The service also includes their delivery service charge (distribution) that is charged to ALL Connecticut electricity customers, no matter who is their electricity supplier.
The Standard Service Offer also provides last resort service to residents and business who either do not have an electric supplier or whose suppliers leave the market. For example, in the summer of 2002, Connecticut Energy Cooperative withdrew from the electric supplier market due to bankruptcy. Consequently, 11,000 customers were transferred over to CL&P and UI and placed on their approved standard service offer plans. This rule facilitated the hand-off without any interruption to electrical service for any of the Co-Op’s former customers.
Neither UI or CL&P produce electricity, so they provide electricity and electricity rates based upon market prices for the commodity. Known as Standard Service Generation, PURA supervises how both utilities purchase and price electricity for their customers, and these rates are set on a semi-annual basis – January 1st and July 1st, respectively. This would be the rate you pay in Connecticut from your utility company if you chose to not participate in energy choice.
Connecticut Energy Choice Is Working
Fourteen years of Connecticut energy deregulation has seen the gradual — and cautious — consumer switch over from the two old incumbent utilities (CP&L and UI) to electric suppliers. However, the years 2008-2010 saw a leap in the switch rate, from 8.7% to 38%. The rise continued on to 2012 with more than 47% of consumers signing up with electricity suppliers. True, the past two years have seen some customers switch back, partly from cold weather and partly from dodgy dealing from less than honest electricity suppliers. All the same, Connecticut’s energy choice is working and PURA’s regulators are introducing revisions to tighten plan terms in the future. As of November, 2014, more than 630,000 CL&P and UI customers have switched to an electric supplier.
Competition is driving down rates because Connecticut’s electricity consumers have the right to choose their provider so that they are not trapped in plans that don’t work for their lifestyle. Connecticut consumers can shop for a variety of offers, including fixed and variable rate plans, that have different lengths of duration and competitive rates, while still receiving the same reliable service from their local utility.