Retail Suppliers Seek Introduction of Choice to Any New Municipal Utilities in Connecticut

Any newly formed or expanded municipal electric utilities in Connecticut should be required to offer customer choice, the Retail Energy Supply Association said in comments to the Connecticut PURA.

As first reported by Matters, PURA, at the direction of the legislature, is studying the expansion of municipal electric companies.

Under current statute, retail electric choice is not available in municipal utility service areas unless a municipal utility has sought to sell power at retail outside of its service area.

"As a result, customers within municipal service areas cannot receive the benefits of customer choice. Thus, RESA urges the Authority to recommend statutory revisions to the General Assembly that will allow customers to continue to receive the benefits of competitive choice in any new or expanded municipal service areas," RESA said.

Specifically, RESA said that PURA, in a report to legislators, "should recommend that the General Assembly revise Connecticut General Statutes section 16-245c to clarify that customer choice would be available to any customers within any municipal service area created or expanded on or after the effective date of the Public Act authorizing such areas."

RESA noted that the establishment of new or expanded municipal service areas without statutory revisions that permit customer choice would create significant regulatory uncertainty. "For instance, without a modified statutory scheme, it would be unclear whether customers within those service areas that are already receiving their generation service from electric suppliers would be permitted to remain on competitive supply and to continue to reap the benefits of the competitive market. There would also be uncertainty about how and by whom these customers and their electric suppliers would be compensated for losses if the customers are forced to receive service from the municipal utility. This regulatory uncertainty may force electric suppliers to evaluate whether they wish to continue to provide service in Connecticut," RESA said.

"Moreover, without statutory modifications permitting choice, electric suppliers and other market participants may not be willing to dedicate resources to a shrinking retail electric supply market. As a result, existing suppliers may exit the Connecticut market and new suppliers may not enter; thereby, further reducing the options available to customers who would remain eligible for choice," RESA said.

RESA said that in addition to requiring customer choice for any new or expanded municipal utilities, statute must ensure proper unbundling of municipal rates to facilitate such customer choice.

Connecticut Light and Power also said that the creation of new or expanded municipal utilities would frustrate state policy due to the elimination of choice in such areas.

"For example, while it is a statewide policy that electric customers in the state have a choice of electrical supplier, customers of a municipal utility do not have such a choice. If municipalities establish utilities, more and more electric customers (some of whom have already elected to purchase their electric supply form a third party supplier) would no longer have choice of supplier, frustrating the state’s policy," CL&P said.

Docket No. 12-06-14