Federal Regulators OK Higher Rates For Southwestern Conn.

HARTFORD (AP) — Gov M. Jodi Rell on Tuesday condemned a ruling by federal energy regulators that would split the state into two regions when it comes to paying electricity rates and force customers in the southern part of the state to pay about seven percent more.

The Federal Energy Regulatory Commission said Monday the pricing zones would encourage private construction of generating plants where they are needed most, especially in the power-poor southwestern corner of the state. The plan would go into effect in 2006.

The policy would allow new power plants built in higher-priced zones to charge more for electricity than new plants built in lower-priced zones.

The ruling brought an immediate response from opponents, who say the policy would raise costs for consumers and businesses, provide a windfall for the energy industry, and fail to address bottlenecks in the electric-transmission system.

“This would have an enormous impact on the 70 percent of Connecticut’s population that lives in the area, cost us jobs, and throw a wet blanket over economic development,” said Ms Rell, who sent a letter to FERC on Tuesday condemning the plan and calling on the commission to immediately reconsider its decision.

“It’s painfully obvious that the real problem in southwestern Connecticut is the capacity of the existing network to carry power, not the lack of power generation,” said Ms Rell.

She noted the FERC chairman made the same point at a meeting in Hartford last month.

Democratic Attorney General Richard Blumenthal said the state will fight to reverse the ruling.

“This two-zone decision divides Connecticut against itself and is an outrage,” Mr Blumenthal said.

The decision by FERC is part of a broader effort to attract power plant development through financial incentives by creating separate market areas in New England.

As now planned, New England would have five such pricing zones: two for Connecticut, one for Maine, one for eastern Massachusetts and one for the rest of New England.

The higher-priced southwestern Connecticut zone would include 54 municipalities in New Haven and Fairfield counties, including customers of both Connecticut Light & Power and United Illuminating Company.

A final decision is expected by June 2005 for implementation in January 2006.

Connecticut’s Department of Public Utility Control and Office of Consumer Counsel also oppose the FERC decision to split the state. In addition to Mr Blumenthal, the attorneys general from Massachusetts and Rhode Island submitted written objections, Ms Rell said.

“This decision must not stand,” Ms Rell said. “I am directing DPUC and the Consumer Counsel to fight this illogical plan as vigorously as possible.”

ISO New England, the organization that operates New England’s power grid, estimates that electricity prices will rise in southwestern Connecticut by about 6.34 percent as a result of the commission’s ruling, while prices in the rest of Connecticut would fall by 0.64 percent.