Recently there has been a lot of discussion about what is included in one’s electric bill and how those numbers are developed. This blog will take a look at the factors that go into a residential electric bill: it is important to note Commercial Electric bills often can qualify for different rates or off-peak pricing offers. An electric bill has four separate components; Generation, Transmission, Distribution, and a Public Benefits Charge. (set by state policies)
Generation is what people typically think of when they talk about their energy bill. It is the cost of the actual power your household used during that billing cycle. For your Generation rate, people can contract with the utilities or with a competitive supplier. If a customer seeks to get power with a supplier, they can also determine how much clean energy they want to include over the state’s required 29% renewable energy. The state’s renewable energy requirement means utilities and suppliers at minimum must offer electricity where 29% have been developed through clean energy resources. When you think of the Electric market, it is more appropriate to think of the stock market. Where the prices can adjust on an hourly basis. In Connecticut, there are no variable contracts in the retail market, so all rates last three billing cycles. The utilities’ adjust rates twice a year. The utility rates are set by the Public Utilities Regulatory Authority (PURA). Supplier rates are posted on energizect.com.
When a utility files for a new rate through PURA they must create an estimate of how the rate would impact household budgets. The utilities must then notify every customer that would be affected by the new rate before a public hearing on the rate. They must provide customers with all of the hearing information and invite them to participate. PURA may have one or more hearings on the proposed rate and must make a final ruling 150 days before the proposed effective date of the new rate. At times PURA has held regional public hearings on the proposed rates. Eversource’s current rate is 7.37kWh, United Illuminating current rate is 8.66kWh, both rates will expire in December 2020.
Transmission rates are the cost to build the infrastructure that delivers power from the manufacturers to local substations. This rate is set by the Federal Energy Regulatory Commission. The distribution rate is the cost to bring the electricity from the substations to customer’s homes. PURA approves distribution rates every four years. In making its approval PURA considers, if the rate allows the utility to recover prudent capital investments, earn a reasonable rate of return on investments and pay operating costs. PURA must also consider whether the rate charged customers shall reflect prudent and efficient management of the franchise operation. Moreover, the rates, charges, conditions of service and categories of service do not discriminate against customers who utilize renewable energy sources or cogeneration technology to meet a portion of their energy requirements.
PURA does regulate the bill design of each utility with the ultimate goal of ensuring transparency for the consumer. Each bill does provide a bar graph to easily compare your usage on a monthly basis.
Recently there has been some conversations about changing how utility rates are determined. PURA has recently opened several dockets which are meant to take a deeper dive into Connecticut’s energy market; including Grid Modernization, affordable rates, and metering infrastructure. More information about these dockets can be found on the PURA webpage, ct.gov/pura.
Fun Fact: ISO-New England is an independent, not-for-profit corporation responsible for keeping electricity flowing across the six New England states and ensuring that the region has reliable, competitively priced wholesale electricity today and into the future.