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Power Play
Energy chair says restructuring bill gaining
support despite concerns
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Business New Haven
2/23/1998
By: BNH
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BNH spoke with Bloomfield State Rep. Mary U. Eberle (D-15) about legislation to restructure Connecticut's electric power industry. Eberle is house chair of the joint Committee on Energy & Technology, which drafted the bill and hosted a public hearing on the matter February 9. Deregulation is shaping up as one of the most controversial issues in the legislature this year. A similar bill failed last year before ever making it to the senate for a vote. The bill would cut rates by ten percent and give some customers a choice of electricity suppliers beginning July 1, 1999.
What's the biggest controversy surrounding this bill?
The most controversial part is dealing with stranded costs and how to compensate utility companies for plants they own and haven't been able to recover the construction costs for because of how the Department of Public Utility Control (DPUC) dictated how they can recoup the costs. This year we mandated that they put the plants up for auction to determine the value on the market. Then, only the difference between the auction bid and the remaining book value is considered stranded and eligible for reimbursement through ratepayer charges. The bill mandates that if they want to claim stranded costs they have to put the generation facilities up for sale - both nuclear and non-nuclear.
Who's not backing this bill?
The biggest opponents are folks who think we shouldn't compete for the over market value of plants, particularly the nuclear plants. We have a persistent group that continues to assert that nuclear plants were a bad decision when they were built, and continue to be a bad decision in that we should not be guaranteeing any kind of recovery in costs.
What's your response to that
criticism?
Whether or not they were a good idea when they were built, that decision was made by the DPUC 20 or 30 years ago. We've used the power from them, they're here, and we've been well-served by them. It doesn't send a good message to change the rules in mid-stream and just walk away. There needs to be a fair apportionment between the shareholders and the ratepayers on the remaining costs, and our bill strikes that balance.
Some critics say that a similar bill in Rhode Island hasn't resulted in the expected savings or competition.
The word we're getting is that the bill there made it very difficult for competitors to come in and bid lower than the electric utilities. We think we've structured our bill differently enough that it won't happen here. The same companies saying don't try this in Rhode Island because you can't beat the system there are telling us that our system is significantly different here.
Can you guarantee that rates will actually be cut by ten percent?
Rates will go down at least during the period of standard offer. Who knows after that? If we get in a mess with Iraq again, [and] if demand for natural gas comes close to supply, prices might go up again. What we believe, though, is that competition will keep rates as low as they can be given any particular set of circumstances.
What are the bill's chances this year of passing?
The preliminary reaction to it is pretty positive. With so many other states having moved on it already, the feeling is that it's time for us to move also. We're not the leader anymore; we're the follower.
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