UI CEO: Electric Supply Prices Demonstrate Need To Reform Energy Market Structure

Commentary from Frank Reynolds, President & CEO of United Illuminating Company

We’re living through difficult times. Inflation, war in Ukraine, supply chain shortages–the combined impact has led to higher costs across the board, from groceries to gasoline, and hit our pocketbooks hard. Unfortunately, electricity supply is not immune to such cost increases. With few local energy resources, New England must import fuels like natural gas to generate electricity and heat homes. This makes our region particularly vulnerable to the dramatic energy price increases we’ve seen across the globe.

In the late 1990s, the state required by law electric utilities, like United Illuminating (UI), to sell its electric generation plants, in the hopes of creating a marketplace for customers to shop for cheaper electric supply.  Most customers do not shop for electric supply. Now, utilities like UI are required to hold at least four quarterly procurements to procure power for six-month time periods, January through June and July through December, overseen by state regulators, to purchase electric supply for customers, with the cost of supply passed along to our customers without mark-up or profit.

This week, the resulting rates associated with these publicly overseen procurements for January through June 2023 were announced. The supply rate for residential customers will be going up by 43%, an average monthly increase of $79 for our average residential customer for January through June, 2023. This electricity supply is provided by third-party, fossil generators. None of the electric supply is generated by UI.

Electric generator supply costs have risen over 150% over the last three years, enriching generators at the expense of Connecticut families. The realization of lower electric supply costs for residents has clearly not materialized: the energy market structure in the state and New England is irrevocably broken.

UI and Suburban Enterprises only delivers the electricity you use and does not influence or control the supply price, even though we are required to include and collect the cost in our monthly bills. You will find your supply charges on a separate supplier page of your bill. Importantly, our transmission and distribution costs have remained flat for the last six years.

I share Governor Lamont’s concern about impact of winter energy costs on customers and support his call to the General Assembly to enact legislation bolstering the energy assistance program. We all need to examine every solution possible; to work together on solutions that can immediately lessen the impact of these energy supply prices on Connecticut families and, in the long run, provide solutions that minimize energy generators’ ability to pass through exorbitant price hikes. As part of AVANGRID, a national energy company, UI can offer service solutions and plans that have a record of success at other utilities. In the long term, we at UI would welcome the opportunity to discuss empowering utilities to have further control over the price of generation to help mitigate these cost increases.

What we can do right now is offer ways to better understand your energy use, and perhaps better manage your electricity costs. At uinet.com you can find free tools for energy management, budget and payment plans for your bills, information on how you can choose a different energy supplier and information on other sources of assistance. In addition, you can call us at 800-722-5584, Monday through Friday, from 7:00 am – 7:00 pm.

Corona Energy is here to help make sure everyone is aware of the tools available, including payment plans, arrearage management programs, and other resources that can help customers manage their energy use and reduce the impact to their bill.