PURA Suspends Eversource Rate Increase
Eversource customers have seen their first bills since the July 1 delivery rate hike, and they are not happy. Despite the July 1st supply charge default rate decrease, many households are reporting unusually high bills. Some Eversource customers have even said that their bills rose over $100 beyond expectations. The high number of complaints convinced PURA to order temporary suspensions of the Eversource delivery increase and roll rates back to the July 30 tariff amount.
The question many CT electricity customers are still trying to understand is how did the situation got to this point?
Understanding your Eversource Bill
Let’s look at what a normal billing period looks like. When you receive your Eversource bill, the supply charge and delivery charge are the major affecting factors. The supply charge reflects the energy you use in a month. The cost of maintenance and use of powerlines to deliver power is the delivery charge.
The supply charge can vary, since deregulated energy gives you choice over your electric rates. Customers can choose to remain with Eversource or seek out their choice of energy companies to find the best deal for them. This rate changes on a number of factors including weather, season, temperature, and availability of surplus.
The delivery charge, however, doesn’t change nearly as dramatically, since it’s based purely on the cost to deliver electricity plus maintenance costs to the local network.
So if the default supply charge fell 22% this past July, why are bills so much higher?
Understand the Eversource Rate Hike
The answer lies by looking at Eversource’s delivery charges. Simply put, the delivery charge is much higher this year than it was last year. A huge part of this increase comes from the Federally Mandaged Congestion Charge (FMCC) , which represents the utility’s efforts to recover costs of delivery and maintenance. In August, 2019, Eversource’s delivery charges to residential customers had a FMCC rate of just $0.00890 per kWh. The July 2020 rate raised the FMCC to 0.03048 per kWh, an increase of over 200%.
Consider this average monthly bill report estimate of 724 kWh of energy used in CT. That means that the FMCC charge rose from about $6.44 per month last August to about $22.06 per month. This doesn’t even factor in this year’s hot summer and how much more time families are staying in their homes. This means more power used for cooling and lighting than previous summers. Bear in mind that that there are still several other calculating factors and it’s easy to see how bills can ramp up fast.
Eversource and Millstone: Who’s responsible?
When called to answer for the increase, Eversource pointed fingers at the Millstone Nuclear Power Station, saying the rate increase stemmed from the 2019 state-mandated agreement to save the power station. This agreement created a 10 year deal where Eversource and other utilities would use power from Millstone to keep it from closing down. Eversource’s statement implies that the mandate forces them to share the cost with consumers to avoid operating at a loss.
In an interview, Millstone’s spokesman Ken Holt disagreed. He said that Millstone sold its electricity at just 4.999 cents per kWh. This price, according to Holt, is the lowest price for a carbon-free resource in CT published to date. In addition, that price is 32% lower than Eversource’s lowest standard offer price of 7.375 cents per kWh as of July 1.
Holt later added that the contract went into effect in October 2019, nine months before this latest rate increase. This suggests that if Millstone were responsible, then Eversource would have been forced to hike prices far sooner. Holt explained, “The other thing Eversource doesn’t seem to be talking about is that the transmission charge went up with this increase. That is totally under their control.”
What to expect from rate hike suspension
CT residents may be less concerned with responsibility and more concerned with what’s being done to solve the issue. After all, with the economic crisis caused by the global pandemic, many homes can’t afford these high rates.
The suspension is designed to help ratepayers deal with the realities of the global pandemic. Residents are already struggling with their utility bills and were hoping for relief once the July supply charge decreases arrived. But many families were angry with these unexpected increases and have called for state regulators to step in and find answers. PURA has begun investigating Eversource to make sure they are not over-collecting on short term revenue at ratepayer expense.
CTenergyratings will continue following this story as it develops to help CT electricity customers stay better informed.