You asked for a discussion of how people can cope with higher energy prices, particularly with regard to electricity.

SUMMARY

Among the ways people can cope with higher energy prices are:

1. participating in utility and other conservation programs;

2. taking advantage of the state sales tax exemption and federal tax credits for energy efficiency investments (customers can take advantage of both);

3. shopping for a competitive supplier;

4. taking advantage, if eligible, of energy assistance programs; and

5. where appropriate, shifting to time-of-use electric rates and installing on-site generation.

INTRODUCTION

While energy prices have fallen substantially in recent months, they remain high compared to recent years. Moreover, electric rates are likely to rise substantially as of January, 2007. This is because the wholesale price of electricity has increased since the electric companies last entered into contracts to buy power for customers who have not chosen competitive suppliers. This is particularly true for United Illuminating (UI), which entered into its contracts three years ago, when wholesale prices were much lower.

CONSERVATION

Utility Programs

Among the ways people can cope with higher electricity prices is by taking cost-effective steps to conserve energy. Connecticut Light & Power (CL&P) and UI have similar conservation programs. The primary residential energy conservation subsidy program is the Smart Living Catalog, which offers energy-efficient products at a substantial discount over retail. The catalog offers a wide variety of products, including lighting; heating, ventilation, and air conditioning; and thermostats. The catalog also offers water efficient products. CL&P and UI mail the catalog to all of their residential customers. It is also available on the Web at http: //www. energyfederation. org/smartliving/default. php/. The discounts and the program's administrative costs are recovered through a charge on electric bills.

Both electric companies also offer a $ 50 incentive to retire a household's second refrigerators and freezer if it is working and at least ten years old. Customers of both companies in the southwestern third of the state who have central air conditioning can also participate in the Cool Sentry program. Under this program, customers receive a $ 100 payment for installing a device on their air-conditioning unit. If a severe power emergency occurs during the cooling season, a signal is sent to activate the devices in the area to reduce electricity use during the emergency. This helps to lower the region's demand for electricity with only a minor change of indoor temperature.

Both companies offer a wide range of conservation programs for commercial, industrial, and municipal customers. UI has a single website for all of its programs, www. uinet. com/clm/index. asp. The websites for CL&P's residential and business programs are www. cl-p. com/clmres/indexclmres. asp and www. cl-p. com/clmbus/indexclmbus. asp, respectively.

The CL&P residential program website also has tips for reducing heating and cooling bills, such as:

1. setting thermostats as low as comfortable in the winter and as high as comfortable in the summer;

2. using programmable thermostats;

3. cleaning or replacing furnace filters monthly;

4. cleaning registers, baseboard heaters and radiators regularly and making sure they are not blocked by furniture, rugs or drapes;

5. checking ducts for air leaks and repairing holes with tape that carries the Underwriters Laboratories logo; and

6. choosing energy-efficient equipment when replacing a heating and cooling system by looking for models with high Annual Fuel Utilization Efficiency ratings or Energy Efficiency Ratios.

The electric and gas companies, together with community action agencies and the state, operate the WRAP program. This weatherization program helps homeowners and renters who are eligible for the Connecticut Energy Assistance Program (CEAP, described below) reduce their energy use and lower their energy bills. These services are provided on a first-come, first-served basis, based on the availability of funds. Further information about WRAP can be obtained by calling

800-388-9727 or going to the program's website, www. cl-p. com/clmres/energy/wrap. asp.

Other State Programs and Funding Sources

PA 05-1, June 2005 Special Session, among other things, established incentives for customers for installing “distributed resources” on their premises. These resources include small- and medium-size generating facilities and, for commercial and industrial customers, conservation and load management measures. The incentives include capital- and operating-cost subsidies and the provision of long-term financing.

The Connecticut Housing Investment Fund operates a low-interest energy conservation loan program using funding from the Department of Economic and Community Development. The program provides loans for such things as replacement heating systems and windows, insulation, and solar energy systems. The program provides loans for single and multi-family housing. Owners of one to four unit buildings may borrow up to $ 15,000 and owners of larger buildings and projects may borrow up to $ 2,000 per unit, up to $ 60,000 per building, for a period of 10 years for eligible improvements. Further information about the program is available online at http: //www. chif. org/owner_borrowers/index. shtml#.

State Sales Tax Exemptions

PA 06-187 exempts certain residential weatherization products and energy efficient heating equipment from the sales tax through June 30, 2007. The exemption applies to:

1. insulation, programmable thermostats, water heater blankets, window film, window and door weather strips, and caulking;

2. water heaters, gas and propane furnaces and boilers, and windows and doors that meet federal Energy Star standards;

3. oil furnaces and boilers that are at least 85% efficient; and

4. ground-based heat pumps that meet the minimum federal energy efficiency standards.

Federal Tax Credits

Federal legislation adopted in 2005 provides income tax credits for homeowners who make energy efficiency improvements from January 1, 2006 through December 31, 2007. The eligible measures are:

1. added insulation to walls, ceilings, or other parts of the building envelope;

2. replacement windows;

3. high-efficiency gas, oil, and propane furnaces and boilers;

4. high-efficiency central air conditioning units, including air-source and ground-source heat pumps;

5. high-efficiency fans for heating and cooling systems; and

6. high-efficiency water heaters, including heat pump water heaters.

The credits are (1) 10% of the cost of added insulation, up to $ 500; (2) 10% of the cost of replacement windows, up to $ 200; (3) $ 150 for qualifying furnaces and boilers; (4) $ 300 for qualifying air conditioning units; (5) $ 50 for qualifying heating fans and cooling systems; and (6) $ 300 for qualifying water heaters.

SHOPPING FOR COMPETITIVE SUPPLIERS

Another way consumers can reduce their energy bills is by shopping for less expensive suppliers. This option is available to all electric and heating oil customers and to commercial and industrial natural gas customers (residential gas customers can only buy gas from their local gas utility). Generally, the prices charged by competitive suppliers are somewhat lower than utility rates.

Another potential benefit of choosing a competitive electric supplier, for large utility customers, is less rate volatility. By law, large electric utility customers who have not chosen competitive suppliers will receive “supplier of last resort service” starting January 2007. Rates for this service will change monthly and will be based on wholesale market costs, which can be very volatile. Customers who wish to avoid this volatility may wish to shop for competitive suppliers who offer fixed price contracts.

Consumers may also wish to consider contacting aggregators. These are entities that group customers together to make them more attractive to suppliers. Further information about aggregators and competitive electric suppliers is available on DPUC's website, www. state. ct. us/dpuc/, which has phone numbers and links to company websites. Another DPUC website, http: //www. dpuc. state. ct. us/DPUCINFO. nsf/2a87d602f30e879485256b430053c129/c21924135eaf77c7852569e000573f27?OpenDocument,

has a list of registered gas suppliers.

ENERGY ASSISTANCE PROGRAMS

CEAP

The Connecticut Energy Assistance Program (CEAP) helps people pay their heating bills. CEAP-eligible households may use a portion of their benefit to pay for cleaning and tuning their heating system. To be eligible, the family generally must have an income 150% of the federal poverty level (FPL) or less; families with elderly or disabled members can have income up to 200% of the FPL. Applicants must also pass an asset test. A Department of Social Services (DSS) website, http: //www. ct. gov/dss/lib/dss/pdfs/energybrochure. pdf, describes benefits and application procedures under this program.

Individuals with income up to 60% of state median income who do not qualify for CEAP may be able to get assistance from the Contingency Heating Assistance Program (CHAP). This program is available only to households who pay separately for their heat. Another DSS website, http: //www. ct. gov/dss/cwp/view. asp?a=2353&q=305188, lists income and asset limits for CEAP and CHAP.

Operation Fuel

Operation Fuel, a non-profit organization, provides crisis benefits during the heating season to households with incomes of between 150% and 200% of the federal poverty level who do not qualify for CEAP. In most cases, the maximum benefit is a grant of $ 250 per year. Further information about this program is available at www. operationfuel. org/

OTHER STEPS

Time of Use Rates

Some electric customers may benefit by switching to time of use (TOU) rates. Rather than paying the same rate regardless of when they use power, TOU customers are charged more for on-peak consumption and less for off-peak consumption. Customers who use relatively little power during the peak period (e. g. , couples where both people work during the day) or who can shift consumption to off-peak periods may see somewhat lower monthly bills by shifting to TOU rates. PA 05-01, June Special Session, requires electric companies to offer TOU rates to their small and medium size customers. It requires the companies to adopt mandatory TOU rates for large customers (those with peak demand above 350 kilowatts), although it establishes a waiver process for these customers.

On-site Generation

Some customers, particularly larger customers who need power and hot water, may benefit by installing on-site generation.

While the best opportunities for on-site generation are generally in the commercial and industrial sectors, the Clean Energy Fund has a program that subsidizes the cost of residential solar installations. This program offers rebates through participating installers for Connecticut residents who install solar photovoltaic systems on their homes. The program offers an incentive of $ 5 per watt for system and installation costs. The incentives are available on the first 5,000 watts of any size

system. Homes can be one to four-unit family residences. Further information about the program is available at http: //www. ctcleanenergy. com/funding/index. html. Connecticut Innovations, Inc. , which administers the program, anticipates that it will expand it to cover small-scale wind generating system later this year.

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