You asked, on behalf of a constituent, for background information on the discounted electric rate for electric heating customers. You also requested a discussion of the feasibility of electric customers using the “national grid” to access electricity from generators in other regions, e. g. , the Tennessee Valley Authority (TVA), in order to promote competition and lower electric costs in the state.

ELECTRIC HEAT RATE DISCOUNT

During the 1970s, the electric industry and the state government promoted the use of residential electric heating, in part as a means of reducing air pollution. This initiative was based, in part, on the belief that the increased use of nuclear power would substantially reduce the cost of electricity. For a variety of reasons, this premise turned out to be inaccurate.

The state’s electric companies, with the approval of the Department of Public Utility Control, developed discounted rates for residential customers who used electricity for heating. One reason for this discount is that electric demand for such customers peaks in the winter, while demand for other customers peaks in the summer. Leveling demand across the year can decrease the cost of serving all customers.

The discount for heating customers has remained relatively constant for many years. For example, in 1982 the rate for residential non-heating electric Connecticut Light and Power customers was 8. 3 cents per kilowatt-hour (kwh, the electricity used by ten 100-watt light bulbs in one hour). The rate for electric heating residential customers was 7. 5 cents per kwh (a 9. 7% discount). Currently, non-heating customers pay 14. 2 cents per kwh, while heating customers pay 12. 6 cents per kwh (an 11. 3% discount). The increase in the electric heating rate from 1982 to present was slightly less than the rate of inflation, as measured by the consumer price index, while the rate increase for non-heating customers was somewhat greater than inflation.

ACCESS TO CHEAPER POWER

It is generally not feasible to ship power from distant regions because of constraints on the transmission system and the physics of transmission. Moreover, the price differential between the Northeast and other regions is likely to decrease over time as stricter pollution control requirements go into effect in the other regions.

There is no “national grid. ” Instead, there is a system of regional grids, one of which serves New England. Power is routinely shipped between this grid and the grids serving New York State and eastern Canada. The New England and New York grids are connected with grids in the rest of the country east of the Rocky Mountains, other than the grid that serves Texas.

There are two factors that significantly limit the feasibility of shipping power from distant regions such as the Tennessee Valley to Connecticut. First, there is substantial congestion on Connecticut’s transmission lines, particularly in the southwestern third of the state. This limits the amount of additional power that could be imported into Connecticut through New York State. While the new transmission lines proposed for southwestern Connecticut would alleviate this congestion, they will not be fully operational until 2009 at the earliest.

Second, the physical properties of transmission lines limit the feasibility of shipping power from distant regions. All transmission lines resist the flow of electricity, with the amount of electricity lost in transmission increasing with the length of the line. As a result, it is usually uneconomic to ship power from distant regions such as the Tennessee Valley to Connecticut.

One reason that TVA and other generators in the Southeast and Midwest are able to generate power more cheaply than northeastern generators is that they rely heavily on old, coal-fired plants. These plants were exempted from emission control provisions of the Clean Air Act that apply to newer plants. However, the Environmental Protection Agency (EPA) has recently ordered these plants to substantially reduce their emissions. EPA acted in response to suits brought by Connecticut and other states, which demonstrated that emissions from the coal plants substantially contributed to air pollution in the northeast. The cost of complying with the EPA order will narrow the differences in the cost of producing power in the northeast and other regions and thus the price of electricity.

Finally, while Connecticut law does not preclude TVA from selling power to Connecticut, federal law created TVA specifically to serve the Tennessee Valley, and restricts how it can operate. Several of the firms that the Department of Public Utility Control has licensed to sell power to Connecticut customers are based outside of the northeast.

KM: ro