Utilities Reach Agreement On Electricity Cost Plan

HARTFORD (AP) — State regulators and Connecticut’s two utilities filed a proposed agreement with federal energy regulators Monday for a new electricity pricing system, a state official said Monday.

The agreement, negotiated over four months, would replace a contentious, two-tiered federal rate plan for New England with a single-rate program that establishes prices through competitive bidding among utility plants.

Consumers would have to pay an additional $4.50 more for an average bill of $100 a month. The Federal Energy Regulatory Commission (FERC) still has to sign off on the agreement.

“We’re not sure FERC will accept it as is,” said Anthony Palermino, commissioner of the Connecticut Department of Public Utility Control.

The agreement would replace the “Locational Installed Capacity Plan,” or LICAP, that was designed to reduce a power bottleneck in southwest Connecticut and elsewhere in New England. LICAP would allow power companies to charge more for electricity in areas where demand is high and supplies are tight.

LICAP would provide increased revenue to power generators as an incentive to build more power plants in areas such as northeastern Massachusetts and southwestern Connecticut, where demand for electricity is enormous.

Opponents argued it will boost electricity bills by as much as 25 percent for some consumers, with no guarantee that anything will be built.

Palermino said Monday’s agreement would require Connecticut to establish more generation plants to increase capacity, increase conservation, and to finish the transmission lines that are under construction.

Palermino added that most of the parties have signed on except state Attorney General Richard Blumenthal. Blumenthal has opposed the LICAP agreement.

The LICAP rate plan was to go into effect on January 1. But FERC last fall delayed implementation until at least October 2006 to give utilities and others the opportunity to work out an agreement.

Maine utility regulators last month withdrew from settlement talks for a proposed electric rate plan for New England, saying they cannot accept increases that would give energy companies an unjustified windfall.