You’ve heard about electric restructuring in the news. You’ve seen changes in your electric bill, but sometimes it’s hard to understand what’s going on with our electric bills and electric companies, because there have been a lot of changes in the last few years.

We depend on electricity in our homes and businesses for lighting, heating, cooling, running appliances, and, of course, all our electronics. If we depend on electricity, we as first-time home buyers will therefore probably be paying more attention to our electric bills as we create our budget each month. It is important to understand how our electric bill works and what choices we have as homeowners. 

The Consumer Education Outreach Program (CEOP), created by the Connecticut Legislature and administered by the Connecticut Department of Public Utility Control (DPUC), informs electric consumers about electric competition and changes in the way we buy electricity. Connecticut's electric market is open to competition, giving electric consumers the power of choice. This means that we, as consumers, can choose the company that sells us our electricity.

Electric Restructuring

To understand electric restructuring in Connecticut, we need to first understand how Connecticut’s electric industry is structured. There are three parts involved in getting electricity to consumers. First is generation, the production of electricity at the generating plant. Next is transmission, the high-voltage towers and lines that carry the electricity. Finally, there is distribution, the poles and wires that carry the electricity into our homes and businesses. 

In the past, all three parts of the electric system were provided by the distribution companies, Connecticut Light and Power (CL&P) and United Illuminating (CL&P). In 2000, this three-part system was restructured. The only part of the system affected by Connecticut’s restructuring law is generation. 

The generation, or production, of electricity is open to competition, and as a result is no longer regulated by the DPUC, which means that we now have a choice of suppliers. We can choose which company supplies our electricity based on what’s important to us, such as price, additional services that may be offered, or whether the power is made from clean, or renewable, energy sources. Transmission and distribution continue to be regulated by the DPUC and provided by CL&P and UI. These parts of the system continue to be regulated to maintain reliability of service.

The Rising Cost of Electricity

In 2006, CL&P’s generation service charge increased 22.4%. and in January of 2007 it increased an additional 7.7%. For UI, which is Connecticut's other major electric distribution company serving the New Haven and Bridgeport areas, the generation service charge increased almost 50%. It is easy to understand why the number-one question on everyone’s mind is, “Why are my rates rising?”
The cause is rising fuel costs, a direct result of the recent hurricanes. These hurricanes have delayed fuel and energy production. In addition, there is continuing turmoil in oil-producing countries. Also, natural gas prices have risen dramatically, which directly impacts many of the generating plants in New England because they rely on natural gas to create electricity. These increased costs are reflected in the wholesale price of electricity. 

There are also federally mandated charges because electricity can’t reach some parts of the state because transmission wires are undersized and need to be upgraded. As a result, more expensive, less efficient plants still operate. Finally, there is the growing demand for electricity in Connecticut.
It’s important to remember that UI and CL&P don’t set the price for electricity, because they no longer own the generating plants. What they continue to own are the poles and wires that deliver the power to our homes and businesses. UI and CL&P buy electricity at market rates and deliver it to our homes and businesses. Also, we continue to call these companies when the power is out, and they continue to bill us for their repair and maintenance services.

The Electric Bill

Every month, we consumer pay the Amount Now Due, but what does that include? It includes the kilowatts used (the total amount of electricity consumed), state and local taxes, costs for maintaining the system, and federal charges for generation deficiencies.
When it comes to the actual cost of electricity–the price per kilowatt-hour–there are several determining factors. The cost and availability of the fuel used for the power generation is the largest factor, but there are also transmission costs and the expense of operating and maintaining the generation plants.

Have your electric bill in front of you before you read this section

CL&P

Take a look at the portion of your bill that gives you options. If you look at page two of a CL&P bill, you’ll see a breakdown of costs. Focus on the portion titled Supplier Services Detail. The total of the first two line items, Generation Service Charge/ Energy Adjustment Clause Charge, along with FMCC Generation Charge represent the Total Supplier Services. When it comes to electricity, your options will be reflected here.

UI

This bill is a little different. On page two, you’ll see a heading titled Total Generation Service Charges. If you focus in on that, you’ll see Generation Service Energy and Bypassable FMCC. The total of the two represent what you’re paying for electric generation.

You Have Options

When it comes to rate plans, you have several options. Standard Service is the electric power that is being supplied by CL&P and UI to customers who did not choose an electric supplier/aggregator; however, you also have a choice of alternative suppliers/aggregators who are licensed and registered by the DPUC. These are independent companies that provide competitive electric generation services. For these options and to learn more, visit www.WattsNewCT.com or call toll-free 888-922-DPUC (3782).

Helpful Terms

Aggregator
An entity registered with the DPUC that brings a group of consumers together to buy energy in bulk

Clean Energy
Electricity generated by sources such as wind, solar, water, and other nonpolluting, renewable sources

Department of Public Utility Control (DPUC)
The agency of the state government that regulates the public utilities of electric, natural gas, and water services, as well as parts of telecommunications and cable television. The DPUC licenses electric suppliers, educates consumers, and provides information about electric choice 

Office of Consumer Counsel (OCC)
An independent state agency charged to act as the advocate for consumer interests regarding matters concerning public service companies, electric suppliers, and certified telecommunications providers 

Electric Distribution Company
A company regulated by the DPUC that delivers electricity generated by others. The electric distribution companies in Connecticut. CL&P and UI no longer generate electricity; however, they continue to own and maintain the poles and wires that deliver electricity and continue to respond to power outages. 

Electric Supplier
A company licensed by the DPUC that provides electric generation services to customers. This is the company you choose to supply your electricity. 

Generation
The production of electricity

Standard Service
The rate charged for electricity provided by CL&P or UI to customers who have not chosen a competitive electric supplier/aggregator

 Transmission and Distribution
The delivery of the electricity from the power plant across the high voltage towers and lines, and the wires and poles into your home or business