Why is Connecticut No. 1 in the cost of electricity among the 48 lower states? Here are 7 reasons
Connecticut’s electricity prices are the highest among the lower 48 states, exasperating consumers and business owners and hampering economic development.
Jet engine manufacturer Pratt & Whitney, for example, cited lower electricity costs when the subsidiary of Raytheon Technologies Corp. announced last year it will build an energy-devouring manufacturing plant in North Carolina rather than in its home state of Connecticut.
In 2019, the most recent year for which data are available, electricity in Connecticut cost about 18.7 cents a kilowatt hour, according to the U.S. Department of Energy. It’s cheaper than what residents of Alaska and Hawaii paid, but is more than double the price in Idaho, Louisiana, Montana, Nebraska and elsewhere.
Cold winters, end of the line and zero-carbon power
Cold winters drive up demand — and the cost — of natural gas to fuel power plants; being at the end of natural gas pipelines adds to transit costs; and public policy is boosting costlier low- or zero-carbon power such as solar and nuclear. That’s only the start.
Ironically, electricity is increasingly expensive as wholesale prices fall due to lower demand, improved energy efficiency and rising use of renewable energy such as solar power. Transmission costs have soared more than six-fold between 2004 and 2019, according to the New England Power Generators Association.
Costs related to the electricity transmission and distribution systems that connect power plants with consumers are for construction, which is higher in the Northeast where land for generators is costlier and the price of labor is higher; operation and maintenance that includes repairing damage related to accidents or extreme storms; and improving cybersecurity, the power generators group said.
Another cited by the state Department of Energy and Environmental Protection is that federal energy regulators allow an “unreasonably high” return on equity — a measure of the profitability of a corporation relative to stockholders’ equity — for transmission costs, ranging from 10.5% to nearly 12%.
Transmission costs in New England have risen from $869 million in 2008 to $2.3 billion a decade later, DEEP said.
In addition, electricity customers pay for transmission congestion that cost $205 million from 2015 to 2019, said Amy McLean, Connecticut director and senior policy advocate at the Acadia Center, a clean energy advocacy group.