Understanding Connecticut’s electricity rates con be confusing, especially when you’re trying to compare your local utility’s state regulated prices with the rates offered by retail electricity suppliers. As it turns out, once you break it all down, it’s pretty straight forward stuff.
To help you and other consumers save become savvy energy shoppers, let’s go through how electricity rates are set up in the Connecticut energy market. Once you have handle on that, you’ll be able to identify how to find the best electricity plan that fits your family’s needs.
As you may already know, electricity consumers have two choices:
- They can sign for the residential standard service offer from their local utility, such as Eversource or UI.
- They can sign up with a licensed electricity supplier.
Standard Service Offer Rate
The Public Utilities Regulatory Authority (PURA) regulates the standard service rates by setting them according to the Generation Service Charge (GSC). The GSC represents the actual cost both Eversource and UI must pay for the electricity they buy either directly from generators by contract and from the wholesale market. This price is passed directly on to customers, neither Eversource or UI make any profit from the energy they buy for consumers. The GSC comprises roughly 40% of the monthly electric bill for most residential users.
PURA holds competitive auctions (sometimes called a “descending clock auction” ) every 6 months generator companies to supply Eversource and UI based on what is needed to meet forecasted load. PURA approves the new rates for the two utilities and posts them each November and May, about seven weeks before they become effective. Because load forecasts are not always accurate, up to 20% of a utility’s supply can be purchased outside of the public bidding process from the wholesale market.
Electricity supplier rates, meanwhile, are not set by PURA. That’s because retail energy providers buy their electricity supply from wholesale market, the day ahead spot markets, or by contracting with generation companies anywhere in the country. They then sell that supply to you.
Retail energy providers not only are on the lookout for the best market deals all the time but they also are able to use a variety of financing strategies to buy electricity for as low a price as possible to offer to their customers. And because the retail energy is a highly competitive market, only those companies that can offer consumers the best deals are able to survive.
And you’ll be able to find the best rates these companies can offer only at CT Energy Ratings.