Why Are Both Parties Divided on a $2.4 Billion Bill Aimed at Lowering CT Electric Rates?

After months of widespread concern about Connecticut's elevated energy costs, both Republican and Democratic parties supported a bold plan this week. The proposal suggests that the state should take out a loan for $2.4 billion over the coming three years to help cover part of its citizens' electricity expenses.

The proposal, Senate Bill 1560 This legislation is authored by State Senator John Fonfara, D-Hartford, an experienced legislator who also holds the position of co-chair for the legislature’s Finance, Revenue and Bonding Committee.

At a press conference held on Wednesday, surrounded by leaders from various political parties, Fonfara announced that his proposed legislation aims to reduce electricity expenses by as much as 20% right away. This reduction would be achieved by eliminating the contentious public benefits charge from consumers' bills and financing this measure via state-backed bonds instead. The public benefits charge currently funds mandated initiatives focused on enhancing energy efficiency, investing in renewable energies, and assisting those who have lower incomes with their utility payments.

Fonfara mentioned that additional clauses in the legislation would lead to greater long-term savings for consumers. These measures encompass overhauling how utility companies buy energy for their clients, enforcing dynamic pricing based on usage times, removing particular solar incentives, and waiving the sales tax on electricity purchases by business and industrial entities, among other adjustments. According to the senator, these collective savings might amount to up to 40 percent off what customers currently pay.

There are specific basic facts we need to recognize and take action upon if we wish to change our current course," Fonfara stated. "Should we opt not to act, electricity prices will keep rising.

Soon after, lawmakers from both political parties started doubting Fonfara’s claims about saving money and the prudence of using almost one-third of the state’s yearly bond limit, which stands at $2.5 billion, solely for this initiative.

Some highlighted that Fonfara finds herself at the heart of disputes centered around a deal with Governor Ned Lamont’s team to secure a position for him on the vacant seat at the Public Utilities Regulatory Authority, responsible for endorsing electricity rates. Following this announcement earlier last month, media reports disclosed that Fonfara possessed a firm that had accumulated over $1 million in unpaid debts. $1 million in penalties and overdue charges from PURA.

On Tuesday, a spokesperson for Lamont stated that the governor was willing to consider certain parts of the bill, including enhancing the energy procurement process and tackling fluctuating electricity demands throughout the day.

However, the spokesman, Rob Blanchard, emphasized that the governor does not consider establishing a new governmental body or taking on additional debt as feasible solutions for addressing the state’s challenges with affordable energy.

"Instead of placing yearly costs on our 'credit card' or pushing aside funding for city parks, roads, and school building projects due to elements within the public benefits charge, as suggested, the Governor believes we should look into methods to decrease [public benefits] fees that might be obsolete or unwarranted," Blanchard stated in his announcement.

House Speaker Matt Ritter, D-Hartford, expressed similar doubt about the level of additional debt suggested in the legislation and questioned if it would be repaid using taxpayer money or through charges added to utility bills.

If there are contributions from the state general fund, we cannot afford it," Ritter stated. "However, if the plan involves having ratepayers pay this off over 30 years instead of just three, then I would consider it.

Even with these reservations, the legislation advanced this week thanks to the support of several important lawmakers from both parties, such as Senate President Pro Tempore Martin M. Looney, D-New Haven, Senate Majority Leader Bob Duff, D-Norwalk, and House Minority Leader Vincent Candelora, R-North Branford.

Candelora mentioned that his group had been in discussions about the bill with Fonfara for the past six to eight weeks. In March, Republican lawmakers became upset when Democrats on the legislature’s Energy and Technology Committee decided against advancing any of the Republicans' suggestions aimed at lowering people's electric costs.

"This bill achieves that, and we anticipate the essential bipartisan discussion required to tackle the worries within our business sector and among our citizens, as well as the effects of elevated electricity prices on the state of Connecticut," Candelora stated.

Fonfara has up to April 24 to arrange a vote to move his bill forward from the committee where he holds chairmanship.

Utilities weigh in

In his comments to the press Wednesday, Fonfara outlined two key pillars of his legislation that he said would work to reduce electricity costs.

Initially, this plan would eliminate parts of the public benefits charge from customers' bills and transfer these expenses to the state via newly issued bonds spread across the upcoming three-year period. The issuance of these bonds would have an annual limit of $800 million, summing up to a collective amount of $2.4 billion.

Secondarily, this bill proposes establishing a novel semi-autonomous body named the Connecticut Energy Procurement Authority. This organization would collaborate closely with electrical companies, the Department of Energy and Environmental Protection, along with regional electricity co-ops. Their joint effort aims to develop an innovative approach to buying energy supplies more economically, ultimately offering reduced rates to consumers.

Fonfara stated that this change would essentially transfer the task of purchasing electricity from utility companies to public officials who could focus throughout the year on securing the most favorable rates in the wholesale electric market, instead of the biannual competitive auctions currently conducted by the utilities.

“Utilities will be removed from the procurement process,” Fonfara stated. “They’ll just have to accept this with gratitude since it’s an unappreciated task for them. They do not profit from it. When prices increase, they face criticism; however, they receive no credit when costs decrease. I am not defending them, but that’s how things stand.”

In Connecticut's deregulated energy framework, customer invoices are divided into four components: the expense for purchasing electricity, the delivery and transmission of this power, along with a fee for public benefits.

The utilities should transfer their supply and public benefit program expenses directly to their customers without adding any markups. Profits for these companies come solely from transmitting and distributing the electricity.

At a public hearing about the bill on Wednesday, representatives from United Illuminating and Eversource indeed commended Fonfara’s legislation. They stated that this proposal provided answers for lowering customer expenses, particularly emphasizing aspects where these companies do not generate profits.

"We remain optimistic that the ideas presented in this legislation could become a tangible outcome, potentially leading to substantial decreases in costs related to supply charges and other aspects aimed at enhancing grid modernization," stated Christie Prescott, who oversees wholesale power contracts at United Illuminating.

The two utility companies additionally backed a clause in the legislation aimed at restricting the number of credits customers with solar panels can accumulate on their bills for returning surplus electricity to the grid.

As an increasing number of customers have installed solar panels and reduced their electricity purchases from the grid, utility representatives noted that the expenses for maintaining transmission lines, utility poles, and other infrastructure now fall mainly on those who do not own solar panels. Data shown to legislators by the company revealed that the quantity of electricity Eversource supplied to its consumers remained approximately at around 20,000 gigawatt-hours last year, similar to levels seen back in 1993.

We face this challenge, which isn’t exclusive to Eversource," stated Doug Horton, the utility’s vice president for distribution rates & regulatory requirements. "Basically, our sales volume is decreasing, yet we still need to keep investing in the infrastructure.

However, this very proposition elicited a strong reaction from environmental advocacy groups and the solar sector alike. They both argued that it would abolish solar incentives and impose additional stress on the power grid.

Maintaining low costs for customers has relied heavily on energy efficiency and solar power," explained Charles Rothenberger, a climate and energy lawyer with Save the Sound, a regional environmental organization. "These measures were crucial since they saved us from having to invest in extensive distribution and transmission infrastructure over the past two decades.

Other reviewers expressed worries that the annual bond limit of $800 million might fall short of covering the total expense of public assistance initiatives, which now exceeds $1 billion yearly, thus casting uncertainty over the sustainability of these programs moving forward.

Claire Coleman, the head of the Office of Consumer Counsel that advocates on behalf of ratepayers, submitted written testimony to Fonfara’s committee stating that those costs can also shift largely from year to year, making it difficult for officials to know how much money they would have to borrow ahead of time to pay for the programs.

"Although it might be acceptable and the suggested legislation could be revised to raise the bonding caps to match the required spending levels, it remains uncertain whether the state’s bond procedure would be most appropriate for financing the initiatives outlined in the proposed bill," Coleman stated.

Fonfara said the intent of the bill was to give ratepayers a three-year window of relief. Meanwhile, lawmakers, in conjunction with the new Connecticut Energy Procurement Authority, would determine whether the programs under the public benefits charge are necessary and whether the costs to run those programs should be borne by the state or by ratepayers through their electric bills. If they’re determined not to be necessary, he said lawmakers could opt to discontinue them.

That's up to the legislature," he stated. "However, it will be a wise choice, based on much more data.

Party infighting

The top two Democrats in the Senate, Looney and Duff, had previously pledged their support for another bill addressing electric prices — Senate Bill 4 —that is currently being developed by members of the legislature’s Energy and Technology Committee. During Wednesday’s press conference, when asked if the Fonfara legislation had replaced their efforts, Looney stated that there was no rivalry between the two bills.

"Ultimately, they will all be added to the hopper and offer what I believe the residents of Connecticut will see as a valid answer to the crisis at hand," LoONEY stated.

Within a matter of hours, however, tensions between the two committees and their leaders flared into the open.

Approximately halfway through Wednesday's hearing, Senator Norm Needleman from Essex, who leads the Energy and Technology Committee as a Democrat, was present. began questioning Horton The Eversource executive spoke regarding a portion of the legislation addressing the securitization of storm-related expenses. He mentioned that this part was very similar to a proposition put forward by the company after Tropical Storm Isaias hit in 2020. "Let me clarify the origin of much of this," Needleman stated as Fonfara interrupted him.

"Senator, this idea originates with this individual right here; it’s my legislation," Fonfara stated.

After more back-and-forth with Horton, Fonfara eventually cut off Needleman’s line of questioning saying that he had surpassed the committee’s five-minute time limit.

“I hope this bill comes to our committee where it belongs and we have a robust conversation about this,” Needleman responded. “This is not the way to solve these problems.”

Later, when questioned about the dispute, Looney released a statement via a spokesperson indicating that such differences of opinion are common occurrences within the standard legislative procedure.

“Forging an agreement is a challenging task, yet it’s essential for any legislation to turn into law,” Looney stated. “Often, we only understand how matters will be shaped and settled towards the end of the legislative period—whether these concerns get consolidated into a single piece of legislation, pursued individually, or parts are integrated into another measure entirely. In contrast to the Republicans, who can simply criticize and suggest impractical ideas, we take responsibility seriously.”

Candelora, the top Republican in the house, held Needleman’s committee responsible for obstructing several propositions advanced by Republicans, including a plan This change would have transformed the public benefits charge into an annual expenditure, funded through the state’s budget.

Speaking to a reporter later, Candelora clarified his support of Fonfara’s bill as “a work in progress,” and said he believes some public benefits programs, such as funding for electric vehicle charging stations, are appropriate bonding expenses while others should be budgeted for.

"What has been aggravating throughout this whole process is that you have an entirely ineffective energy committee that has turned all these matters into extremely polarized and highly charged issues," Candelora stated.

None of the Senate Republicans attended Wednesday’s press conference with Fonfara. The previous day, members of their caucus were not present. publicly accused Their colleague Senator Fonfara was accused of being complicit in a plan where they would offer political backing for Lamont’s renomination of MARISSA GILLET as chairperson of PURA. In return, Fonfara expected to receive one of the five commissioner positions within the organization.

Senate Minority Leader Stephen Harding, R-Brookfield, told reporters he believed that deal likely violated the state’s bribery statutes. But in the same press conference, Harding did not discount the idea of working with Fonfara on energy policy.

“We will do anything possible to reduce people’s electric bills in the state of Connecticut,” Harding said. “We don’t care who we have to work with.”

Later in the week, Harding and a top Republican on the Energy and Technology Committee, Sen. Ryan Fazio, R-Greenwich, said there are “several concerning aspects” of S.B. 1560 and that they would not support the bill in its current form.

Specifically, Fazio said that Fonfara’s proposed Connecticut Energy Procurement Authority would have overlapping duties with existing state agencies. He also said a proposed fund administered by that authority to adopt smart metering technology and other infrastructure upgrades would result in the creation of what he called a “mini public benefits charge” that would still appear on electric bills.

Nevertheless, Harding and Fazio expressed appreciation for Fonfara’s attempts to tackle the problem.

Harding said he, too, was concerned with the creation of the new quasi-public authority, which he said he sees as a potential landing ground for Fonfara amid the scrutiny into the senator’s bid to obtain a seat on PURA. “It is quite suspect,” he said.

Tom Swan, who serves as the executive director of Connecticut Citizen Action Group, described Senator Fonfara's assurances about saving residents money as "extremely deceptive." He also expressed concerns, suggesting that the bill brings up multiple "ethical issues," particularly considering the senator's involvement in the energy sector through his business activities.

“There is absolutely no trust for Sen. Fonfara to be playing a role in this,” Swan said.

Fonfara told reporters on Wednesday that he has no interest in serving on the new authority. He did not respond to additional requests for comment about the legislation this week.

A third bill The proposal concerning electricity pricing, developed by members of the Government Administration and Elections Committee last month, aimed to prevent Eversource and United Illuminating from controlling both electrical and gas utilities simultaneously. Additionally, it introduced stricter eligibility criteria for individuals serving on PURA’s board. This week, Speaker Ritter stated that he doesn’t anticipate this bill advancing further.

"That wasn't brought up correctly, and it will collapse," Ritter stated.

However, regarding the remaining two bills, Ritter indicated they could yield valuable concepts as well. "There are essentially two key energy-related laws under consideration: S.B. 4 and Senator Fonfara’s proposal," he stated. "What I suggest is combining everything into one comprehensive piece of legislation."