posted on Tuesday, June 20, 2006 2:01 PM
by
Andrea Kells
Back to the Vertically Integrated Electric Utility
Connecticut's legislature is deliberating an energy bill that would enable the state’s investor-owned utilities — Connecticut Light & Power and United Illuminating — to own generation once again. Passage of the bill would signal a retreat from the Connecticut’s 1998 decision to promote power supply competition by severing ownership and control of generation from the monopoly wires businesses of power transmission and distribution.
The proposed law would direct Connecticut's utility regulators to oversee three requests for proposals (RFPs) to supply the utilities' long-term resource needs. The first RFP would ask the electric utilities for at least 500 MW of peaking power plants and conservation measures; the second would open up to other power suppliers the peaking and demand-side requirements not proposed by the utilities; the third would seek non-peaking resources from all sources.
Proponents of the energy bill contend that it would empower regulators to exercise more control over power supply costs and resulting prices. In opposition, however, ISO-New England has countered that electric utilities should not re-enter the supply market and that the state should instead rely on the competitive supply market. That reliance will stimulate more generation development and will concentrate risk on the developers and not customers, according to the ISO. Other groups have objected that the RFP process as proposed is facially biased in favor of the utilities.
Developers with state-approved generation projects in the pipeline have suspended further development pending implementation of the region’s proposed forward capacity market. Now that FERC has authorized implementation of that market, whether any of those projects get built may depend on whether the legislation comprising the RFPs is enacted.