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Why Connecticut has the highest electricity rates in the lower 48

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Connecticut consistently has some of the highest – if not the highest – electricity rates in the Continental US. Some residents pay 17,18,19 and even 20 cents per kilowatt hour compared to the US average of about 12 cents per kilowatt hour.

So, what gives?

Energy and utilities experts consistently point to a few key factors driving Connecticut’s costly power: the state’s reliance on natural gas, which is cheap and abundant nationally but not found in Connecticut; regional pipelines with limited capacity leading to price spikes, especially in winter months; and basic geography.

“Here in the Northeast, we’re at the end of the pipeline whether it’s natural gas or oil, so the transportation costs to get that fuel here drives prices up,” Eversource spokesman Mitch Gross said recently.

Lack of Resources

Natural gas accounted for about half the state’s power in 2018, according to EIA. Nuclear power from Waterford’s Millstone Power Station supplied another 43 percent of the state’s electricity last year. The lack of other in-state sources, combined with congestion in gas transmission lines, hits residents’ electricity bills.

Due to the reliance of natural gas and no natural gas resources in-state, Connecticut relies on regional pipelines which can sometimes be a bottleneck.

A 2015 report by the Office of Legislative Research noted that interstate gas transmission lines “have not expanded in proportion to the increase in supply and demand.” It also is very unlikely new pipelines will be added to the region anytime soon.

Meanwhile, aggressive renewable energy initiatives also drive up costs in the short-term. But, while renewables, like solar and off-shore wind, may have a high up-front cost; they will help during peak demand and long-term price relief.

Expensive Land and Delivery

Connecticut’s relative high-cost in terms of salaries, taxes, land and other costs is another factor.

Connecticut customers pay, on average, about 15 percent more in wire and other infrastructure costs — worked into the delivery portion of utility bills — than Massachusetts and other neighboring states.

The delivery portion of the electricity bill is multiple line items broken down into what the utility collects to run the business, as well as state and federal taxes and fees. In Connecticut the delivery portion consists of;

  • Transmission charges help pay for New England’s high-voltage transmission system.
  • The distribution customer service charge pays for meters and wires to each house to give customers access to the system, whether or not power is used that month.
  • The Federally Mandated Congestion Charge helps cover congestion costs on the local electric system when local demand is so high, it forces higher-cost Connecticut plants to run and more expensive power has to be brought in from other parts of the grid.
  • Electric system improvement charges pay for upgrades like smart meters, and distribution charges cover local delivery lines, linemen, tree-trimming and other operational costs.

The good news is that Connecticut is a deregulated state. Which means that while you stuck paying the delivery fee, you can shop the supply portion of your bill for a cheaper rate from a retail energy provider.

Efficiency is Vital

While electricity prices are high in Connecticut, the average homeowner uses less electricity here than in many other states.

Also, Connecticut is closer to the middle of the pack when it comes energy affordability according to at least one metric: residents spend about 2.2 percent of their household income on electricity bills, compared to the national average of 2.15 percent. In 2018, Connecticut had the highest per capita personal income of any state — nearly $75,000, according to EIA. In lower-income states like Mississippi, residents spend almost 3.5 percent of their annual income on electricity.

Still, many residents are feeling the sting when their electricity bill comes every month. But, by shopping their electricity supply rate and by being more energy efficient, Connecticut residents can lower the burden of the high electricity prices.

 

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