Eversource, United Illuminating will cut Connecticut's electric rates for some, but not until 2024
The electric bills for roughly 1.5 million power customers in Connecticut are expected to spike dramatically come January, but a long-awaited initiative that would ease monthly energy costs for the state’s lowest-income residents is still more than a year away.
Last week, both Eversource and United Illuminating — Connecticut’s two investor-owned electric utilities — notified state regulators that the price their customers pay for power generation will jump by roughly 50% early next year.
United Illuminating, which powers homes and businesses in Bridgeport, New Haven and 15 surrounding towns, said its average power customer would soon need to pay roughly $79 more per month for electricity.
And Eversource, which supplies electricity to customers in Hartford, Stamford, Danbury, New London and 145 other towns, said its average customer would likely need to pay an additional $84 per month due to the rising cost of natural gas and the price of power production in the Northeastern United States.
Those announcements shocked utility ratepayers across the state and set off a wave of denunciations and finger-pointing from Connecticut officials. State lawmakers from both parties sent out press releases complaining about the utilities and vowing to find solutions to alleviate the financial pressure on state residents.
One such solution, which would slash the power rates for poorer Connecticut families, has been in the works for more than two years but has yet to go into effect.
The initiative officially started in 2020, when state lawmakers passed a bill that was known as the “Take Back Our Grid” act.
That legislation, for the first time, gave the state’s Public Utilities Regulatory Authority the power to develop a special set of electric rates for the lowest-income residents in the state, a step that nearly a dozen other states have already taken.
After months of hearings and back-and-forth with the two utilities, the three members of PURA voted earlier this year to create two new classes of power customers in Connecticut.
Any residential customer that is living at or below 160% of the federal poverty guidelines would see the normal cost of electricity reduced by 50%. That means an individual that takes home less than $21,744 or a family of four earning $44,400 or less would be eligible to cut their power bills in half.
At the same time, any residential power customer that takes home less than 60% of the state’s median income would get a 10% discount on their electric rates. That group would include individuals earning $39,761 or less per year or a family of four earning roughly $76,465 or less annually.
Those changes won’t lessen the power bills for anyone earning above those thresholds.
But the state’s utility regulators and other consumer advocacy groups argued the new rate structure could help to reduce the number of uncollected bills and utility shutoffs in the state. And they hope it will help families to cap their energy costs at less than 6% of their income each month.
That could have a serious benefit for many people in the state.
Mary Sanders, a retiree who lives in Hartford, wrote to the state’s utility regulators earlier this year to voice her support for the new discounted rates, and she explained the difficult choices she makes each month when her bills come due.
“As a senior struggling to make ends meet I truly appreciate this effort,” she wrote. “I was laid off a few years ago at the age of 63 after working 30 years in various nonprofits. I had to take my Social Security early and a loss of $300 monthly.”
“It’s become increasingly difficult, and after rent payments, I’m deciding between food,
medical expenses, transportation and utilities with the $600 that’s left,” she added. “I keep my energy costs as low as possible, but it’s still too high.”
She is not alone in that situation. Many people in Connecticut spend a substantial amount of their income on electricity, even before the rate hikes that Eversource and United Illuminating announced last week.
Federal census data from 2020 estimates 17% of the state’s population — roughly 600,000 adults and children — live in a household that earns less than 160% of the federal poverty guidelines.
Meanwhile, Connecticut is one of the most expensive locations in the country to buy electricity.
According to data from the Energy Information Administration, Connecticut had the second-highest residential electric bills on average in 2021, only behind Hawaii.
That's due to the fact that United Illuminating and Eversource are two of the most expensive investor-owned utilities in the country based on a price per kilowatt basis.
Those realities pushed state lawmakers and the utility regulators to pursue the reduced rates for low-income households.
Both Eversource and United Illuminating have said they are working to implement the new discounted rates, which were officially approved in October, but the two utilities told PURA that they would be unable to achieve all of the necessary billing and accounting changes for some time.
United Illuminating informed PURA that it could take up to 11 months for the company to fully implement the new rates. And Eversource said it would potentially be 16 months before the lower rates show up on people's power bills.
Gage Frank, a spokesman for United Illuminating, said the new discount rates would help to protect low-income residents from some of the volatility in the energy market, like the current upswing in generation costs.
But neither Connecticut utility said they had plans to speed up the implementation of that new rate structure.
"We strongly support the establishment of the low income discount rate that will help those who need it most," Mitch Gross, a spokesman for Eversource, told the CT Mirror. "Unfortunately, implementing the discounted rate, or any new rate can’t be done with a simple flip of the switch."
"All changes made to our billing system have to be carefully planned and fully documented to ensure accuracy of the new rate, which includes running multiple complex tests on our system that are critically important and take time," Gross added.
As a result, PURA gave both utilities until the beginning of 2024 to sort out the logistics and implement the new rates.
That administrative delay is now a concern, however, among some of the state lawmakers who passed the "Take Back Our Grid Act" in 2020.
Sen. Norm Needleman, a Democrat who chairs the legislature's Energy and Technology Committee, said he and his colleagues authorized the discounted rates in that legislation because they understood that any future rate hikes would disproportionately affect poorer households.
But when they passed the law, Needleman said, lawmakers did not know the regional energy markets would be facing such a shock just two years later.
"We have a situation here that is a little more desperate than it was yesterday, and we need to figure it out," Needleman said, referencing the upcoming rate hikes.
One thing that could speed up the rollout of the new discounted rates would be for the state government to share people's verified income information with the utilities. The state Department of Social Services already has most of the information the utilities would need as a result of running the state's Medicaid and Supplemental Nutrition Assistance Program.
PURA specifically noted that type of data-sharing arrangement in its order in October and noted that without it, the utilities would need to run their own income verification checks themselves.
That would inherently slow down the process and would make it impossible for the utilities to automatically enroll people for the discounted electric rates.
It's unclear whether DSS would need some type of legislative change in order to share people's income information with Eversource and United Illuminating.
But if it is, Needleman said, he and his colleagues will strongly consider giving DSS the ability to securely share that information.
"If there are legislative fixes, I'm happy to do that as fast as possible," Needleman said. "If it's possible to do it, we should do it."