You asked for (1) a description of the components of a homeowner's electric bill and the current rates charged by Connecticut Light and Power (CL&P), (2) the bases for these charges, and (3) a discussion of what would happen to energy delivery if these charges were suspended. We answer each question in turn.

ELECTRIC BILL COMPONENTS AND CURRENT RATES

Table 1 presents the components of a bill and CL&P's current charges for these components for its residential, non-heating customers (the order of the components is slightly different than they appear on customers' bills). In addition to these components, which are based on the number of kilowatt-hours a customer uses, there is also a flat monthly distribution customer service charge ($ 9. 75 for most residential customers).

Table 1: Components of an Electric Bill

BASES OF THESE CHARGES

The first two line items on the bill are attributable to the cost of the power itself. The Generation Services Component is CL&P's cost of buying power on the wholesale market. Under PA 98-28 (the electric restructuring law) CL&P and United Illuminating were effectively forced to auction off their power plants and buy power from generators that own power plants in Connecticut and nearby states. The Energy Adjustment Clause modifies the rates, up and down, to reflect changes in wholesale costs.

The federally mandated congestion charges are attributable to congestion on the transmission system, particularly in the southwestern third of the state. This congestion limits the ability of the utilities to import power from other parts of Connecticut and other regions. To maintain system reliability in the face of this congestion, older, less efficient power plants in southwestern Connecticut need to run even though their costs of production exceed what their owners can earn by selling the power on the wholesale market. A large part of the congestion charge revenue goes to these plant owners for “reliability-must run” payments, to cover the difference between their operating costs and the market price. Part of the congestion costs are allocated to the generation part of the electric bill (the second line on the bill), while most are allocated to the delivery services part of the bill.

The remaining line items on the bill include the costs of delivering the power to customers and certain public policy costs. The transmission charge is the cost of delivering power from the power plants over high-voltage lines to substations, where the voltage is reduced to lower levels (e. g. , 110 volts for residential service). The last item on the bill is the transmission adjustment clause, which reflects transmission costs that were approved by the Federal Energy Regulatory Commission, notably the new transmission lines being built from Bethel to Norwalk and Norwalk to Middletown.

The flat distribution service customer service charge covers the company's costs in operating customer call centers, among other things. The per kilowatt-hour distribution charge is the cost of shipping power from the substation to individual homes and businesses.

The competitive transition assessment (CTA) is used to recover the utility's stranded costs. These are costs that the Department of Public Utility Control (DPUC) authorized the utility to collect for its investments, primarily for power plants, that the utilities did not recover when they auctioned off these assets. The eighth line of the bill reflects a rebate that the company is providing its customers because it over-recovered its stranded costs in 2005. The CTA is based on anticipated sales. If a company sells more power than was projected in a given year, it will receive more money than it needs to recover its stranded costs during that year. DPUC has ordered CL&P to rebate its 2005 over-recovery in 2006.

The combined public benefits charge is the sum of three charges mandated by state law, reflecting public policies adopted in PA 98-28. These charges fund conservation and renewable energy programs and cover the utility's costs in complying with various public policies, e. g. , protecting hardship customers from shut-offs in the winter months.

CONSEQUENCES OF SUSPENSION OF THE CHARGES

Suspending most of the charges described above would potentially lead to severe consequences. For example, suspending the generation services charge (by far the largest component of electric bills) would presumably mean that the generators would cut off power to CL&P, since they no longer would be paid. Similarly, it is unclear how the utilities would deliver power to their customers if the transmission and distribution charges were suspended. As the name suggests, the state does not have jurisdiction over the federally-mandated congestion charges.

The state's ability to suspend the CTA is substantially limited by CGS Sec. 16-245h et seq. In effect, these provisions provide for the issuance of bonds backed by the CTA. CL&P has taken advantage of these provisions for most of its stranded costs that are recovered by the CTA. The law precludes the state from reducing CTA revenues in any year below the amount needed to pay the debt service on the bonds in that year.

The state could suspend the combined public benefits charge, since it reflects policy decisions rather than the costs of producing and delivering power. This would result in lower funding for conservation and renewable energy programs. These charges account for less than 2% of an average residential customer's monthly bill.

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