OPINION: The story behind electric rate increases

OPINION: The story behind electric rate increases

By Len Suzio

Many readers remember last June when a brouhaha erupted over the electric rate increases approved by the Public Utilities Regulatory Authority for Eversource to charge consumers. The public outcry was so loud that the politicians in Hartford demanded action and the regulators at PURA temporarily rolled back the big increases in electric rates.

The operative word in the last sentence is “temporarily.” For the reality is that the biggest reasons for the big rate increases were the political mandates imposed on utilities by the very same politicians who feigned outrage when the impact of their political policies was passed from the utilities to Connecticut customers.

Now PURA is about to approve the rate increases again and the indications are the politicians and Eversource are about to try to hoodwink the public — with regulatory approval, of course!

What’s the game plan? How will Eversource, the regulators and the politicians get the rate increases the public so roundly objected to last year? The answer: by playing with the numbers to make it appear to be a much smaller rate increase. The flimflam will be done in two steps. First, deflate the real increase and second, spread the impact out over a longer period of time.

How will the real increase be understated and sold to the public?

Eversource has announced and the press has reported that the rate increase for residential customers is 8.2%, a substantial hike but significantly less than the real rate increase which for residential customers is correctly computed as 13.22%. The company computes the significantly understated 8.2% rate hike by changing the base on which the rate hike is computed. The real rate increase is based completely on increases only in the delivery section of a household monthly bill, but Eversource has computed the percent increase on the total bill — including generation charges which are unchanged.

There is no debate, the real increase is based solely on delivery charges, already much higher than the actual cost to generate electricity (which Eversource can charge only the actual cost with no profit). So once again, consumers will be confronted with electricity bills showing it costs twice as much to deliver electricity as it does to create it!

The story is even worse for commercial purchasers of electricity, which are charged the so-called “Last Resort Service” rate. The increase for the delivery of electricity for companies like Accel Corporation, located in Meriden, will be 22.92%! This will make manufacturing in Connecticut more expensive and less competitive with the rest of the country where the average cost of electricity is about half the rate here in Connecticut before this latest added cost. No wonder why Connecticut’s economy has been shrinking and job growth lacking.

But the manipulation of the real rate is only the first step in the great electricity rate hoax of 2021. The second step will be to spread the increase out over three years rather than the year-to-year basis on which cost increases are typically passed on to consumers. This means the real cost will be even more expensive because the cost of financing the 3-year payout will be added to the increased delivery costs.

No one knows how much more the financing costs will add to your electric bill, but the bosses at Eversource, the regulators and the politicians are betting that the public won’t understand a smaller rate increase repeated over 3 years will be more expensive than a single large increase to be paid in only one year.

One last ingredient in the great electric rate hike of 2021 needs to be clarified. A very important reason for the substantial increased costs in the delivery section of your bill is that almost the entire increase is the result of political policy mandated from Hartford. In fact, more than 25% of the charges in the “delivery” section of your electric bill are really not delivery charges at all. They are “public policy” charges required to be added to delivery charges by the Legislature. Effectively, the politicians in Hartford have made Eversource a sub rosa tax collector and whipping boy for Connecticut’s highest in the continental US electric rates.

It’s a Faustian bargain. Eversource makes record-breaking profits while the politicians decry the company for excessive rates to consumers. The Eversource bosses take their punishment and cry all the way to the bank. The politicians get millions of extra dollars in fees collected under the guise of “delivery charges” and look like heroes when they lambast the big utility for doing what they were ordered to do by the politicians criticizing them. The utility and politicians win and the public loses once again.

Len Suzio is a former state senator representing the 13th Senate District.

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