Why We Need to Cap Fixed Charges in Connecticut: To Protect Consumers and Support Energy Efficiency & Local Clean Power

Vision

To advance a clean energy future, we need a modern power grid with full consumer control over energy generation, consumption, and costs. This modern power grid should enable consumers to make beneficial energy decisions. This can mean many things:  installing rooftop solar; participating in demand response; weatherizing and investing in high-efficiency appliances; comparing apartments based on energy cost data; or, choosing to make no changes at all. Yet, Connecticut utilities continue to increase already high fixed charges, which hurt consumers by increasing the amount that must be paid regardless of energy use and, in so doing, interfering with the objectives of a modern power grid.

Problem

A fixed charge is an automatic monthly fee that applies regardless of how much electricity the consumer actually uses. Consumers must pay it to obtain access to electricity.  High fixed charges discourage consumers from investing in energy efficiency and local clean power, such as residential solar. These charges also fall hardest on those consumers who use the least amount of electricity – typically, those on low incomes, seniors, efficient users, or households with solar PV arrays.
Historically, a reasonable fixed charge for residential customers has been in the $5 to $10 range. Yet, the residential fixed charges of Eversource Energy (in Connecticut) and United Illuminating are, respectively, the highest and the second highest in New England for any major electric utility. Eversource’s is now $19.25 per month, a twenty percent increase over the previous amount. UI’s is now $17.25 per month. Further, both utilities can be expected to seek additional increases in their next rate cases (2016 or 2017). In its most recent rate case, Eversource proposed a residential fixed charge of $25.50, while asserting that its analysis showed it was actually entitled to a $34.96 charge.

Solution

Connecticut’s General Assembly can solve the problem of ever-increasing and excessive fixed charges by placing a reasonable cap on fixed charge amounts for residential and small business customers. California successfully capped residential fixed charges at $10 in 2013. By lowering and capping fixed charges right now, we can give all consumers, including the most vulnerable, a real chance to benefit economically from the rapid advances in technology that are already modernizing the power grid. Connecticut needs a permanent solution to both protect consumers and to steer regulators towards electricity rate designs better aligned with key public policy goals.