Electric rates are set by the Department of Public Utility Control (DPUC) and are designed to recover the cost of providing service.  When setting rates, the DPUC first determines the cost to serve each of the major customer groups; that is, residential, commercial, industrial and streetlighting customers.  Rates are then set to collect these approved costs based on an estimate or forecast of sales.

 

 

Prior to year 2000, electric rates charged to most residential customers in Connecticut included a monthly customer charge and a single rate per kilowatt-hour (kWh) that was applied to all consumption, 24 hours a day, 7 days per week.  In general, electric rates reflected a single price per kWh that recovered the cost for The Connecticut Light and Power Company and The United Illuminating Company to generate electricity, move electricity across the transmission system and distribute/deliver electricity to homes and businesses.  Combined, the generation, transmission and distribution of electricity equals the total cost (often referred to as the fully bundled cost) of providing electric service.

 

 

In year 2000 Connecticut deregulated its electric industry.  As part of electric deregulation CL&P and UI were required to show customers some of the individual costs that make up the total cost of providing electricity.  This is commonly referred to as the unbundling of electric rates.

 

Although electric rates were unbundled, the total of all individual charges still added up to a single price per kWh that was charged during all hours of the year; the price for electricity was the same at 2 p.m. on a hot July afternoon (when demand for electricity is high) and at 10 p.m. on an October evening (when demand for electricity is low).

 

Your electric bill is divided into two major categories; supplier services or the generation of electricity and delivery services, the transmission and delivery of electricity.  These are explained below.

 

 

The cost of the electricity generated at power plants.  The GSC price on your electric bill reflects either the cost that CL&P or UI pays to purchase the electricity they deliver to you or the cost you pay if you have chosen an electric supplier.

 

Fixed monthly charge that recovers a portion of CL&P or UI's cost to provide delivery services.  This item recovers the cost of meters, meter readings, the cost to issue bills, service lines from the street to your home or business and other administrative items.

 

 

Charge that is billed based on the number of kWhs your use and that recovers other costs that CL&P or UI incur to provide delivery services.  These other costs include payroll, investment in utility assets such as poles, wires, transformers and substations and a host of other costs not included in the Monthly Customer Service Charge. 

 

 

The cost to move electricity across high voltage lines including the investment in the transmission system and ongoing operation and maintenence cost.

 

 

CL&P and UI sold their generating plants in 2000.  In general, they sold these plants for less than they owed on them.  The CTA recovers the difference between what CL&P and UI owed on their generating plants and what these assests were sold for.  The underrecovered value is known as stranded cost. 

 

 

This charge recovers the expense of items that serve the public interest.  These include the

Systems Benefit Charge, the Conservation and Load Management Charge and the Renewable Energy Investment Charge.

   

 

When rates were unbundled in 2000, the average cost for the generation portion of your electric bill was about 4 to 5 cents per kWh and represented about 50% of the total cost.  Since that time, the generation portion of the bill has increased dramatically and now averages between 11 to 12 cents per kWh representing about 70% of the total cost.  Following these links to see how CL&P and UI's rates have changed since 2000.

 

UI - Change in Rates 2000 to Present 

 

 

 

The cost to provide electricity varies throught the day and is generally highest between 12 noon and 8 p.m., on weekdays.  This is Connecticuts peak demand period.  The cost also varies seasonally, and is generally higher during the summer and winter months.  Basically, hourly and seasonal peak demand, like the demand for electricity in the afternoon during summer heat waves, drives higher prices.  The ISO of New England tracks and posts the hourly price of electricity on its web site. 

 

Similar to peak pricing used for air travel, cell phones, hotel stays, etc., time‑of‑use electric rates means that you pay lower rates during periods of low demand (i.e., off-peak) and higher rates during periods of maximum demand (i.e., peak).

 

In the past, peak electric rates were charged from 7 a.m. until 11 p.m. weekdays.  Off-peak rates were charged during all other times, including all weekend hours.  The use of this 16-hour peak time period provided little or no opportunity for customers to move (i.e., shift) their electric consumption to off‑peak hours to take advantage of lower rates.

 

Peak rates are now charged between 12 noon and 8 p.m. weekdays.  Off-peak rates are charged during all other times, including all weekend hours.  For UI's business customers, peak hours are 10 a.m. until 6 p.m.

 

As a result of reducing the number of peak hours, lower off-peak prices are available about 75% of the time, providing customers a greater opportunity to take advantage of these rates to lower their cost. 

 

 

Time-of-Use rates have been optional for all customers for many years.  In 2006, the DPUC directed CL&P and UI to begin a phase in of mandatory Time-of-Use rates for residential and commercial customers.  The phase in will take place over several years beginning with high use customers in 2008.  In each succeeding year, mandatory Time-of-Use rates will be applied to additional customers based on declining levels (thresholds) of consumption or demand.

 

 

The following shows the phase-in for UI residential customers:

It is important to note that the average UI residential customer uses about 700 kWhs per month.  So, the policy regarding mandatory Time-of-Use rates is initally being applied to customers who use well above the average.

 

 

The following shows the phase-in for UI's small commercial & industrial (C&I) customers:

UI customers can follow these links for more information about Time-of-Use rates.

 

 

 

Mandatory Time-of-Use rates for CL&P residential customers was to begin in 2009, but has been put on hold until the DPUC can determine which meters should be used by CL&P's residential customers in the future.

 

CL&P customers can follow these links for more information about Time-of-Use rates.

 

DPUC Decision - Net Metering, Time-of-Use for Generation and Delivery Rates and Cost Allocations

 

 

The following shows the phase-in for CL&P's small commercial & industrial (C&I) customers:

The phase in ends in year 2013 with residential customers who consume 2,000 kWhs or more per month.  Once a customer is placed on a Time-of-Use rate, they must remain on that rate.  For commercial customers, the phase in is based on their monthly peak demand for electricity.

 

 

Time-of-Use rates are designed to reduce Connecticut's ever growing peak demand for electricity.  Charging higher prices between noon and 8 p.m. on weekdays and lower prices in all other hours will provide customers with a financial incentive to reduce consumption during the peak hours in order to lower their electric bill.

 

If Time-of-Use rates are optional, many customers would not select them voluntarily, choosing instead to remain on the "flat" rates that have been charged in the past.  While there is no guarantee that customers will change their usage patterns, those that do can lower their bills.

 

 

Time-of-Use rates provide a financial incentive to use less electricity during the peak hours of noon until 8 p.m., weekdays.  To take advantage of this opportunity, customers can: