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Utility Reports Spot Pricing Would Have Been Lowest Cost Default Service Option, On Average, Over Last Ten Years
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In response to a data request, Connecticut Light & Power reported that the lowest cost option to serve mass market default service customers (standard service) over the past 10 years would have been utilizing the spot market
As previously reported, the Connecticut PURA had directed CL&P to compare the use of the following for standard service, for the past 10 years: a full requirements service contract with a wholesale supplier, utilizing Millstone’s generation, and purchasing power in the spot market.
"Over the analyzed period, the lowest cost option on average was utilizing the spot
market," CL&P reported
Specifically, the 10-year average prices were as follows (cents per kWh):
Full requirements service: 7.568¢
Millstone + Spot: 5.335¢
CL&P Spot Self Supply (day-ahead and real-time market): 4.835¢
CL&P noted that, under the study period, there are times when each of the three potential options would have yielded both the lowest
and the highest costs for customers
CL&P said that, "Much of the data is skewed due to the extremely high prices during the 18 months from
January 2023 through June 2024."
"When this period is removed, the differences
between the 3 Standard Service administration options shrinks," CL&P said
Specifically, when removing January 2023 through June 2024, the average prices for each model were as follows (cents per kWh):
Full requirements service: 6.471¢
Millstone + Spot: 5.382¢
CL&P Spot Self Supply (day-ahead and real-time market): 4.956¢
CL&P also said that volatility in the full requirements option results from the timing of the fixed price standard service periods, which are January through June, and July through December. "This places the two highest priced months of the year in the H1
rate period," CL&P said
"Changing the rate periods to run February through July and
August through January would change this dynamic," CL&P said
CL&P stated, "As stated in prior interrogatories in this docket, utilizing either
Millstone or spot purchases transfers cost risks to customers and these manifest through
over or under rate recoveries. While not shown in the values on page 3 of the attachment,
but stated in prior interrogatories, the volatility associated with spot market purchases is
quite high and those costs significantly decrease the value of spot market purchases over
the long run."
CL&P further said, "Page 4 of the attachment highlights that the Millstone PPA cannot act as a true price hedge
for Standard Service because the output is not consistent month to month or year to year
and the output from Millstone does not match or follow the Standard Service hourly load.
As a result of this dynamic, utilizing the Millstone PPA for Standard Service could result
in extremely large under recoveries."
CL&P does not support the use of the Millstone PPA for standard service
at this time
Answering a separate data request, the Retail Energy Supply Association addressed the timing of the standard service rate periods
RESA noted that peak months trade in the wholesale market as a package until closer to delivery.
Specifically, January/February trade together until the preceding December, and
July/August trade together until the preceding June.
RESA said, "If the Public Utilities Regulatory Authority were to split the January and February and
July and August procurements, because there is not an efficient market for wholesale
suppliers to hedge their positions, fewer suppliers may be willing to offer to serve
Standard Service load in any given solicitation. Moreover, any suppliers who are willing
to submit offers may incorporate risk premiums to reflect the lack of liquidity and the
potential for wide variability of costs. As a consequence, the price suppliers bid to serve
Standard Service load may include increased risk premiums. Thus, while splitting the
summer and winter months over procurement periods can potentially lower the price
difference between the first half and second half of any delivery year, the potential for
participation of fewer wholesale suppliers in Standard Service procurements and
inclusion of higher risk premiums could result in Standard Service customers paying
more overall for any given delivery year."
Docket 12-06-02RE04
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January 23, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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