After the storms of 2011 put Connecticut’s investor-owned utilities under intense scrutiny, state regulators are looking at allowing for more municipal utilities.
The Connecticut General Assembly passed a bill — which Gov. Dannel Malloy signed into law in June — calling on the Public Utilities Regulatory Authority to start examining the possible expansion of the state’s seven public utilities and the creation of more.
While some issues arise with the overall system costs, municipal-owned utilities have greater local control and a much smaller service area than investor-owned utilities such as Connecticut Light & Power and United Illuminating. They also function as nonprofits or divisions of the local governments, meaning they don’t work to make a profit.
“Our focus is just Norwich, and that tends to be a guiding principal for us,” said Mike Hughes, spokesman for Norwich Public Utilities, which provides electricity, natural gas, water and sewer.
Connecticut has seven public utilities: Wallingford, South Norwalk, East Norwalk, Norwich, Groton, Jewett City, and Bozrah Light & Power. The organization operating the Mohegan tribe reservation in Uncasville also operates its own utility, although it is not considered a municipal utility.
Since the large-scale power outages caused by the Oct. 29 snowstorm and Tropical Storm Irene in August, there has been an increased call to make forming public utilities easier, but the push hasn’t come from any of the existing ones, said Drew Rankin, chief executive of the Connecticut Municipal Electric Energy Cooperative.
“There’s been no effort by any of the municipal electric utilities in Connecticut to seek new customers outside of their service areas,” Rankin said. “They are neutral to it.”
No municipality or organization has come to CMEEC inquiring about the possibilities of starting their own utility, Rankin said.
Instead, the push is coming from state legislators — such as State Rep. Vickie Nardello (D-Prospect), co-chair of the Energy & Technology Committee — who see more municipal utilities as a better option than having two dominate investor-owned utilities.
“What really escalated this was the storm response,” Rankin said.
Municipal utilities tend to have lower rates than CL&P and UI, but their local control and smaller service areas are the benefit when it comes to responding to outage emergencies. After the Oct. 29 snowstorm, CL&P had 67 percent of its 1.2 million customers without power, some for up to 11 days. On the flip side, Norwich Public Utilities had 450 of its 22,000 customers without power, for less than an hour.
Rankin said the chief executives of the municipal utilities as well as the majority of workers tend to live in the towns they service and are attuned to the individual community needs.
“That intimacy to the company to the homeowner to the utility is generally pretty tight, and therefore thought as more responsive,” Rankin said.
PURA is set to open a docket looking at more municipal electric utilities later this summer and will deliver a report to the legislature by Jan. 1.
More municipal utilities aren’t the answer to all the state electric power needs, said State Sen. John Fonfara, who, with Nardello, co-chairs the Energy & Technology Committee.
To start or expand a municipal utility, a town would have to buy up the infrastructure already put in place by CL&P or UI, a cost that can run into the hundreds of millions of dollars. CL&P and UI’s ratepayers paid for that infrastructure to be put in place, and they need to be compensated, Fonfara said.
CL&P covers 80 percent of Connecticut’s electric needs and takes care of many of the regional issues not addressed by municipal utilities, such as transmission, renewable power purchases and not shutting off power to customers who fall behind on payments in the winter months.
Municipal electric prices tend to be lower in part because they are not held to the same responsibilities as CL&P and UI, Fonfara said. Their rates are not regulated by PURA.
“If more customers leave for municipal utilities that leaves a smaller and smaller pool of people to pay for the responsibilities of the system,” Fonfara said. “If people look at the differences in price and rates, that is what makes it attractive; but there is more to it than that.”
Norwich Public Utilities started as an electric utility in 1904 and has more than paid off the cost of its startup infrastructure, Hughes said. Content with serving its existing customer base, the utility has no intention of spending the millions to acquire more service territory.
“As it stands now, we don’t have plans to do that,” Hughes said. “This is not anything we have in the works at all.”
