You asked why Connecticut cannot regulate the rates charged by non-utility generators in the state in the way that the Department of Public Utility Control (DPUC) historically regulated rates for utility-owned generation.

Historically, DPUC regulated electric rates on a cost basis. Electric utilities were allowed to recover their prudently incurred costs, including the capital and operating costs of their power plants. They were also allowed to earn a rate of return on their investments in power plants and other infrastructure that allowed them to attract needed capital and maintain their financial integrity (CGS § 16-19e).

The electric restructuring law (PA 98-28), in effect, required the utilities to sell off their power plants and to buy the power they needed to serve their customers on the wholesale market. Federal law (16 U. S. C. § 824) gives the Federal Energy Regulatory Commission jurisdiction over the interstate wholesale electric market. It pre-empts states from regulating the rates charged by wholesale generators in the state, such as Dominion, NRG, and PSEG, that sell into the New England market.

On the other hand, federal law does not preclude Connecticut's utilities from buying back the power plants they sold pursuant to the state's restructuring law, or the DPUC from regulating such re-purchased plants on a cost of service basis. However, at current market prices, the utilities would have to pay several billion dollars to buy back all of the plants they sold.

Moreover, current state law (CGS § 16-243m) substantially restricts the ability of the utilities to reenter the generation market. Utilities were allowed to submit proposals to DPUC to reduce costs associated with congestion on the transmission system. The proposals could have been for new generating capacity, including the expansion or repowering of existing plants (repowering increases a plant's capacity by making it more efficient). A utility could have proposed to buy back one or more of the plants it sold in order to expand or repower it under these provisions. However, if DPUC approved the proposal, the utility would have been required to sell off the plant, or the power it generates, five years after the plant went into service, unless DPUC waived these requirements. Moreover, there is a 250 megawatt statewide cap on utility ownership of generating capacity. (A typical fossil fuel plant has a capacity of approximately 500 megawatts. ) The utilities chose not to submit bids under the current request for proposals issued by DPUC, although DPUC can issue subsequent requests for proposals.

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