You asked what the position of Connecticut Light & Power (CL&P) and Northeast Utilities was on the 1998 energy restructuring proposal (HB 5005).

SUMMARY

In general, CL&P and Northeast Utilities favored the energy restructuring proposal of HB 5005—ultimately adopted in PA 98-28 and codified in Title 16 of the General Statutes. In February and March 1998, CL&P and Northeast Utilities officers testified at hearings before the Energy and Technology, Environment, and Finance, Revenue and Bonding Committees, in support of the restructuring plan of PA 98-28. They supported the creation of a consumer choice market, participation by their affiliates in the auction of generation facilities, and the creation of renewable resource and conservation funds. The utilities strongly opposed a cap on securitization of stranded costs, and also felt that renewable resource portfolio standards, which required them to get part of their power from renewable resources, would be impossible to meet with existing generation capacity.

COMPETITION

Michael Morris, chairman of CL&P, testified before the Energy and Technology Committee on February 9, 1998 that “competition in the electric utility business is, in the long run, good for all of the citizens of Connecticut. ” Accordingly, he said, CL&P supported the restructuring proposed in HB 5005 because it offered a reasonable approach for the introduction of customer choice. Similarly, Greg Butler, vice-president of Northeast Utilities, said before the Finance, Revenue and Bonding Committee on March 9, 1998 that “competition is good for the State of Connecticut. ”

AFFILIATE PARTICIPATION IN THE AUCTION OF GENERATION FACILITIES

CL&P was “very supportive” of restructuring plan provisions that allowed the utilities affiliates to participate in auctions of CL&P nuclear and fossil hydro facilities. Specifically, the company felt that allowing for the sale of facilities through competitive auction would ensure that the plants would be sold at fair market value. Morris also testified before the Energy and Technology committee that CL&P supported the auction participation portion of the restructuring plan because Connecticut and New England need to have a regionally and state-located, long-term generator of electricity.

ENVIRONMENTAL PROTECTIONS

William Stillinger, director of research and environment planning for Northeast Utilities, testified on February 20, 1998 before the Environment Committee. Stillinger said that Northeast and CL&P strongly supported the proposed creation of both a renewable resource development fund and a conservation and load management fund. He also testified, however, that the proposed renewable resource portfolio standard was unachievable. He cited a lack of renewable production capacity and an overly stringent definition of 'renewable resource', which excluded existing hydro electric units, as reasons why the portfolio standard was set too high.

CAP ON SECURITIZATION

The utility companies lobbied strongly against a cap on securitization of stranded costs. Morris argued that securitization of non-generation assets should be allowed so long as DPUC could “verify (an) additional customer benefit. ” Similarly, Butler said that “it is appropriate and proper for the utility to recover 100% of stranded costs. ” CL&P felt that a set cap on securitization was an arbitrary restraint on the utility's ability to recover its stranded costs, and to provide the greatest amount of savings for customers.

ZS: dw