Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-5543

Title:

AN ACT CONCERNING THE CREATION AND EXPANSION OF MUNICIPAL UTILITIES.

Vote Date:

3/28/2012

Vote Action:

Joint Favorable Substitute

PH Date:

3/20/2012

File No.:

SPONSORS OF BILL:

Energy and Technology Committee

REASONS FOR BILL:

To define conditions under which a municipality can use eminent domain concerning the creation of a municipal electrical utility and how to handle the expansion of a municipal electrical utility into a neighboring town.

SUBSTITUTE LANGUAGE:

To conduct a study and prepare a report on how municipal electrical utilities operate and the impact of their expansion.

RESPONSE FROM ADMINISTRATION/AGENCY:

None expressed

.

NATURE AND SOURCES OF SUPPORT:

Rep. Vincent Candelora, 86th District: Supports the bill. He requests that consideration be given to Richard Branigan,Town Manager of North Branford's testimony

Richard Branigan,Town Manager, North Branford. Supports the legislation. Neighboring communities could benefit. Three utility companies provide service in his town and this adds to confusion, as they have a variety of rates, service levels and other factors.

Donna Hamzy, Legislative Associate, Connecticut Conference of Municipalities (CCM): CCM is a statewide organization representing Connecticut's cities and towns. Their members represent 90% of Connecticut's population. Supports the bill. Recent storms and rough winter weather have resulted in recent power outages to customers not serviced by municipal electric companies. Those municipalities that had municipal utilities were able to recover from the storms with greater ease.

CCM also states additional discussion should be undertaken to understand the impact of this bill. They recommend that the State provide a blueprint of options.

Kennard Ray, Legislative Director, Connecticut Working Families: Supports the bill. Allowing municipalities to control the generation of power “needs to be an option for every town in this state.” In switching to public power it will save on executive salaries and increase competition and reduce costs, as “Connecticut pays some of the highest costs in the county.”

John Murphy, Connecticut Citizens Action Group (CCAG): CCAG represents 20,000 families from across Connecticut. Supports the bill. “Municipalities should be able to decide whether or not creating their own municipal electric utility or joining with a neighboring one makes sense for their community.”

NATURE AND SOURCES OF OPPOSITION:

Stephen Gibelli, Associate General Counsel of Northeast Utilities Service Company, on behalf of Connecticut Light and Power: He has concerns about the bill. It violates CL&P's 5th and 14th amendment rights. Connecticut has existing laws that cover this issue, and the proposed law is unnecessary. “Utilities' facilities do not end at each municipalities' border. The distribution system is not independent of each other; there is a interrelatedness and taking a silo approach could have a negative impact on another town.

Retail Energy Supply Association (RESA), a trade association of 21 competitive energy suppliers opposes the legislation. RESA cites the Public Utility Regulatory Authority as of February 29, 2012 representing 67% statewide electric load, 92% were large commercial and industrial electric load, 80% small-medium commercial, 46% residential served by commercial electric. This is restrictive and would eliminate the consumers' right to choose because municipalities decide a neighboring town/city's energy.

UIL Holding Company suggests a careful review be done as current and future considerations will impact whether municipalities pursue municipal energy generation projects. (The substitute language will conduct a study on creating municipal electrical utilities and their expansion.)

Lack of clarity on eminent domain could result in increased costs. It would result in limiting the retail choice which has been established practice of Connecticut. The acquisition of electric utility would mean “tax increases to residents, as well as reconfiguring the company's electric system to accommodate town boundaries.” Responsibilities for meter reading and customer service/billing system and maintenance and infrastructure would need to be considered.

“If a municipality purchases a distribution company's system, this may result in a loss of some or all tax revenue to both the state and the municipality.” The transmission assets would be subject to federal jurisdiction as a part of interconnected interstate electric grid “which is a federally supervised process.” This would require adherence to North American Electric Reliability Corporation (NERC), Critical Infrastructure Protection (CIP) and Emergency Preparedness and Operations (EOP).

This would also likely negatively impact energy efficiency and weatherization and renewable energy generation initiatives that is largely supported by electric distribution company customers.

If the company workers loose their jobs as this would result in increased unemployment. Unions may need to enter agreements with municipalities and expect as high wages as they currently receive from the energy distribution companies.

Reported by: Laurel Ann Coleman, Assistant Clerk

Date: April 2, 2012