CT Electricity Deregulation – what does it mean?

Connecticut's electricity markets are deregulated.

Connecticut adopted legislation to deregulate electricity in 1998. That regulation allowed consumers to choose their electric suppliers. The act required the state's two electric companies to unbundle (separate) their generation components from the rest of their businesses. It required them to auction their power plants and other generation assets. The goal was to eliminate the utility's monopolies, increase competition, and lower costs.

 

Deregulation separated "electricity" into supply and delivery.

Deregulation splits up the electricity provision into supply and delivery. The supply refers to the electricity production from the generation plants (natural gas or nuclear). The delivery relates to distributing, maintaining wires and poles, and consumer invoicing for those services. In an electricity-deregulated market, companies known as REPs — Retail Electricity Providers—provide the supply, and the utility's role is the delivery.

 

Under deregulation, supply is competitive, but delivery is still monopolistic.

When the electricity supply is separated from the utility and given to electricity providers to manage, this creates competition. Delivery continues to be the function of Eversource and UI, and PURA, the state electricity regulator, oversees them. Several suppliers can compete to serve the customer. The utilities – Eversource and UI are prohibited from competing in the supply business. They only make money through delivery – i.e., distribution, maintenance of wires and poles, metering, and invoicing.

 

Why do some consumers still have UI/Eversource as their supplier?

In the current deregulated environment, consumers are required to choose their suppliers. However, for consumers who do not choose a competitive supplier, the law requires utilities to purchase supply in what is called "Standard Service" through auctions. Eversource and UI pass on this cost to the consumer and are prohibited from adding any margin.

 

Is your reliability impacted when you switch?

Nothing changes since the utility is still responsible for delivery and getting paid for it. The utility bills you and then passes the supply charge to the supplier you have chosen to serve your load.

 

Why have standard service prices been much higher than competitive suppliers in recent years?

For nearly a decade, our electricity markets were oversupplied, and hence, the standard service auctions – as the large buyers – were able to get reasonable prices. However, in the last couple of years, our electricity markets have been constrained, especially in winter months. Hence, standard service prices "can" spike. Shopping for electricity is essential in this environment.