Connecticut has on average the worst electricity prices in New England, and second worst throughout the United States, according to the Energy Information Administration (EIA).
Released May 24, EIA’s latest ‘Electric Power Monthly’ report shows (see chart) data from March 2023 based on cents per kilowatt hour in five categories: residential, commercial, industrial, transportation and all sectors. Connecticut averaged 33.23, 20.63, 15.47, 23.78 and 25.99, respectively, consistently ranking as one of the highest in the region and country.
New England states fared worse than other regions — outside of Alaska and Hawaii — averaging 24.20 in the ‘all sectors’ category. In the same category, Connecticut was followed by New Hampshire (24.87), Massachusetts (24.70), Maine (22.35), Rhode Island (21.67) and Vermont (17.41).
Thankfully, these numbers slightly decreased from EIA’s prior report, based on February 2023 data, but Connecticut’s position has remained unchanged — more than likely influenced by Eversource Energy’s and United Illuminating Co., skyrocketing rates this past winter. However, Eversource customers are anticipating relief with rates reportedly decreasing by 22% expected to take effect July 1.
With the continued war in Ukraine and zero natural gas pipelines (because of New York blocking the Constitution Pipeline), Eversource’s lowered summer rates may only be temporary.
For long-lasting changes, state policy should center on a recognition that Connecticut’s high costs are also self-inflicted and reducing energy costs is central to fostering long-term investment and job creation. While the legislature is currently debating a bipartisan bill to study “hydropower assets in the state and their benefits,” what are other solutions to solve Connecticut’s energy problems?
Here are some of Yankee Institute’s ideas:
Update and Merge the Renewable Energy Credit Tiers
In 1998, the state required utility companies to purchase renewable energy credits (RECs) to support the construction and operation of solar panels, wind turbines and similar projects. This program, known as the Renewable Portfolio Standard (RPS), arbitrarily separates different renewables into tiers and requires arbitrary levels of support for each. Utilities must buy RECs from each category. At the same time, Connecticut’s RPS excludes most hydro-electric dams from its definition of ‘renewable’ energy.
State-level interventions in the wholesale energy market are extremely inefficient, and the state’s climate goals would be better served by a carbon price mechanism set at the federal level. But if Connecticut is going to continue subsidizing renewables, the state’s approach should be generator-independent, and should make more types of renewables eligible so that REC purchases flow to the most efficient providers.
Allow Utilities to Show State Compliance Costs on Bills
Connecticut’s high electricity prices stem directly from policy decisions in Hartford. These include mandatory support for the Millstone Nuclear Power Plant, mandatory renewable energy purchases and a range of state taxes and surcharges. Although utilities are authorized to show some of these, other parts are baked into their overall transmission costs. The state’s electrical utilities operate under strict rules about how their bills can be printed. Easing those rules to allow greater cost transparency will help the public understand — and make more judgments — about state energy policies. The utilities should be authorized to show the cost of RECs, the state’s power purchase agreement with Millstone, and any other compulsory spending.
Allow Small Nuclear Reactors
Advances in nuclear technology will soon allow for the widespread production of small modular reactors (SMRs), which require less capital investment and are easier to site. Saskatchewan Power Corporation, the Canadian province’s main electric utility, has taken steps to build a distributed network of SMRs over the next 15 years, going so far as to select a provider. This year, the General Assembly opened the door to building an SMR at Millstone Nuclear Plant in Waterford by adding an exemption to the state’s 1979 restriction on new reactors. With small reactor technology advancing rapidly, the General Assembly should eliminate the ban altogether to avoid giving a single business a leg-up. Given the state’s push for greater electrification in transportation and home heating, it’s more important than ever that the state eliminate obstacles to emerging technologies. Welcoming SMRs and other emerging generation technologies will give Connecticut a better chance to reverse its unfortunate distinction of having some of the country’s highest electricity costs.
Ask Congress to Repeal the Jones Act
The federal Merchant Marine Act of 1920, also known as the Jones Act, blocks foreign-flagged ships from moving goods between United States ports. Shielded from competition, the aging fleet of Jones Act-compliant ships has shrunk to below 100 and effectively eliminated maritime shipping as an option for people looking to move goods between Connecticut and other U.S. ports. What’s more, at present, there are no U.S. flagged, U.S.-built liquified natural gas (LNG) ships. The effects range from higher gasoline prices and higher winter electricity costs to a greater volume of heavy traffic on Connecticut highways and difficulty replacing cross-sound ferries. The law has left New England relying on Russian liquified natural gas during cold snaps. Although this isn’t a state policy matter, Connecticut state officials haven’t shied away from weighing in on federal decisions that have even marginal ramifications for the state. One of the most immediate benefits from repealing the Jones Act would be that foreign-flagged ships could move LNG from Texas to New England, rather than making the region dependent on more distant foreign sources. Repealing the Jones Act would also benefit Connecticut ports by expanding the number of ships eligible to use them. Bridgeport area officials have long touted the potential value of the city’s harbor as an economic engine, especially as an alternative to the busier ports of New York and New Jersey.