Connecticut Draft Would Punt on Policy Question of Expanding Municipal Utilities, "Cites" Retail Supply Issue

A draft Connecticut Public Utilities Regulatory Authority decision concerning an investigation into the creation and expansion of municipal electric utilities (MEUs) would refrain from, "intruding on the public policy discussion regarding the merits of expansion of municipal electric utilities."

The draft decision fulfills the charge of Special Act 12-8, which directed PURA to identify procedures necessary for a municipality to establish or expand an MEU and to identify statutory changes necessary to do so, and the draft does not stray from this charge by including recommendations on a proffered policy.

Customers at Connecticut municipal electric utilities cannot currently choose a competitive provider for their electric supply.

While the draft would refrain from making policy recommendations, the draft would take care to cite, in particular, comments from the Retail Energy Supply Association. "RESA suggested, should the public policy of the state be modified to support the creation or expansion of MEUs, that end-use customers within a municipal service area also have the opportunity to have customer choice to receive their generation services from a competitive electric supplier. RESA also suggested that the MEUs be required to unbundle their services between delivery and supply, similar to the manner in which electric companies were required to unbundle," the draft notes.

"As highlighted in previous OLR Research Reports and in written comments, the municipalization statutes (Conn. Gen. Stat. §§7-213-233) were originally adopted in 1893 with few substantive changes since then although many laws and regulations affecting the utility industry have significantly changed the utility landscape. The municipalization statutes contain a number of archaic provisions such as the reference to the 'manufacture' of gas or electricity 'for lighting purposes.' Also, consideration must be given to the impact that municipalization would have on a number of state public policies such as capital plant investment to serve customers within a municipality and whether such costs should be recognized for recovery through stranded costs as well as the degree, if any, of continuation of conservation and load management programs and grants. The Authority respectfully refers those policy issues to the General Assembly for their consideration," the draft provides.

While not recommending a policy, the draft notes that a "potentially helpful" statutory change, if it were to be determined that the public policy of the state is to expand or emphasize municipalization, would be granting municipalities legal authority regarding eminent domain or compulsory purchase by a municipality of existing private electric distribution assets.

The draft notes that, currently, Conn. Gen. Stat. §7-224 does not appear to grant municipalities the power of eminent domain to force the sale of electric distribution plant to the municipality; rather, the language suggests that sales or transfers may only occur if the existing electric distribution company makes a determination to "elect to sell."

Docket: 12-06-14