Some 800,000 customers of Connecticut Light & Power and United Illuminating would get a new electricity supplier under Gov. Dannel P. Malloy’s budget proposal to raise another $80 million in auction proceeds for the state’s needy coffers.
Because Connecticut is an electrically-deregulated state, businesses and households can choose a third-party power supplier. If they do, CL&P and UI still deliver the power to the home or business, but the generation portion of the customer’s bill – which makes up roughly half of the cost – is paid to whatever electric supplier the customer chooses.
Customers who have chosen to stick with CL&P and UI as their suppliers pay a standard service rate. Neither utility makes a profit on that supply, as they are required by regulators to sell it to customers at the same rate they pay the power generators.
About 46 percent of both utilities’ customers have made the switch, representing 713,000 homes and businesses.
Malloy proposes that the supply rights to the roughly 800,000 customers who haven’t made the switch be auctioned to the highest bidder.
In the auction plan, those standard service customers would be put into large groups of roughly 100,000 each. The state would then hold a series of auctions where the highest bidder gets the exclusive right to supply the generation portion of their bill.
The winning bidder would be required to sell that electricity at a rate lower than the current standard service rate. Customers still would receive only one electric bill from either CL&P or UI.
Malloy estimates the customers will save $65 annually.
By participating in the auction, electric suppliers can bypass the marketing efforts usually necessary to get customers to switch to their service.
Malloy estimates the proceeds from the auction will generate $80 million for the fiscal year starting in July.