Bipartisan proposal would end public benefits charge, create new agency to buy electricity

A bipartisan group of lawmakers rolled out a new bill Wednesday that would remove the public benefits charge from electricity bills.

Sen. John Fonfara (D-Hartford) estimated the move would save ratepayers 20%, a sign that “relief is coming."

The bill would also create a new quasi-public agency to buy electricity for most customers, removing procurement responsibilities from the utilities.

It got support from a group of Senate Democrats and House Republicans during a press conference before a legislative hearing at the Legislative Office Building in Hartford.

“The bills are too damn high and people that have small business, people living on fixed incomes, single parents trying to raise a family cannot afford these bills,” Rep. Joe Polletta (R-Watertown) said.

The bill was proposed by leaders on the Finance, Revenue and Bonding Committee.

It was getting bipartisan pushback from top members on the Energy and Technology Committee, though, who insist they should also get a look at the bill. They questioned if the proposal would produce the promised savings.

Fonfara, who co-chairs the Finance Committee, said the state would instead bond over a period of three years to fund the programs supported by the public benefits charge.

After those three years, lawmakers could decide whether which programs are worth keeping and decide whether to continue funding them with bonding or through some other mechanism.

The bill would also create a Connecticut Electric Procurement Authority to buy electricity from customers who purchase their energy directly from Eversource or United Illuminating, and not from a third-party supplier.

Eversource and UI would still deliver electricity if the change were approved.

State law requires the two companies to buy electricity, but it also dictates that procurement happens at specific periods three times per year.

“It's like buying stocks three times a year irrespective of whether the market’s up or down, you wouldn’t do it,” Fonfara said. “That's what we do for your supply.”

CEPA would be allowed to buy electricity year-round, a move Fonfara said would let the authority find the best prices. CEPA could also enter into short or long-term agreements.

He estimated this could reduce supply costs by 20% over time.

Supporters compared the idea to the Connecticut Municipal Electric Energy Cooperative, a partnership of six cities that buy electricity and deliver it on their own. Those municipalities serve a combined 70,000 customers.

But Sen. Ryan Fazio (R-Greenwich) was skeptical CEPA would be as successful as Fonfara predicts at speculating on energy prices.

“It is an extremely difficult thing to beat the market in purchasing commodities in a competitive market,” Fazio said. “Anybody who does it for a living who is really, really good at it would be very, very rich.”

Sen. Norm Needleman (D-Essex) also questioned the idea, noting the current process gives the Public Utilities Regulatory Authority, or PURA, some oversight.

Eversource and UI are allowed to pass on procurement costs to customers but do have to get PURA approval.

Needleman was pushed back on the public benefits plan. He said bonding could be a way to fund capital improvement projects, but he noted the programs also include things like energy assistance for lower-income customers.

“I don’t think you bond for something that’s an ongoing program,” Needleman, who is co-chair of the Energy Committee, said.

Fazio, a ranking Republican on that committee, said the change would simply move those costs from electric bills to tax bills.

The proposal got support during Wednesday’s public hearing, including from Eversource.

“We're thrilled to see a bipartisan initiative take shape to do a deep dive into these complex energy issues that are perplexing customers and offer productive solutions that can result in meaningful and sustained change for customers,” Eversource spokesperson Sarah Paduano said.

She also said Eversource would be willing to offer its expertise to the state on “how to deliver safe, reliable power in the most cost-effective.”

Business leaders also celebrated the proposal.

Connecticut Business and Industry Association Vice President of Public Policy Chris Davis said many companies already shop the third-party energy market, so CEPA would do the same for businesses that don’t.

He also noted bonding for the public benefits charge would fall under the existing bond cap, so the change would not violate the state’s fiscal guardrails.

“Ultimately we want to see the ability for costs to be driven down and that’s the number issue for businesses around the state,” he said.