Connecticut utilities criticized for 'greed' after suing to charge ratepayers incentive fees

As households continue to bristle at high electricity bills, Connecticut's two largest utility companies have gone to court over whether they can continue billing customers for incentive-related costs that state leaders want to eliminate.

What happened?

At the center of the dispute is a federal lawsuit from Eversource and Avangrid, filed after Connecticut sought to stop the companies from collecting a federal incentive tied to their participation in ISO New England, the regional grid operator.

As The Hartford Courant reported, cited by Yahoo News, the disputed incentive would cost customers about $4.5 million a year combined, or roughly 10 cents a month for the average Eversource customer.

The program dates to the early 2000s, when Congress and the Federal Energy Regulatory Commission encouraged utilities to join regional transmission organizations. In return for voluntarily giving up some control over transmission assets and operations, utilities received an incentive equal to an added 0.5% return on equity.

Governor Ned Lamont's administration argues that the incentive no longer makes sense because Connecticut now requires utilities to participate in ISO New England, rather than allowing participation to be optional. The utilities, however, say the state is overstepping and interfering with federal energy policy.

U.S. Sen. Richard Blumenthal sharply criticized the lawsuit, saying: "The amount of chutzpah in filing this lawsuit is only exceeded by Eversource and Avangrid's greed."

Why does it matter?

For many families, electric bills are already consuming too much of the household budget. Inflation, rising demand, limited supply, and the cost of modernizing the grid have all made energy affordability a growing concern in daily life.

Connecticut officials say transmission costs are up 77% since 2015 and make up roughly 15% to 16% of a typical residential electric bill. Meanwhile, Eversource posted about $1.69 billion in net profit last year from operations in Connecticut, New Hampshire, and Massachusetts. 

The lawsuit is the latest clash between utilities and regulators over who gets to decide what customers should pay.

What's being done?

Lamont's administration has taken a two-step approach. First, it backed legislation last year that made participation in ISO New England mandatory for Connecticut utilities. It then filed a complaint with FERC asking that Eversource and Avangrid rates no longer include the 0.5% incentive.

Lamont said the move could save Connecticut customers money and, if other New England states follow suit, could save ratepayers across the region about $14.5 million annually on shared transmission costs.

The utilities, meanwhile, argue that the policy could backfire by discouraging investment in energy infrastructure.

Eversource spokeswoman Jamie Ratliff said, "Transmission investments are critical to lowering energy prices by enabling access to any additional sources of generation — such as wind and nuclear power — which are urgently needed to meaningfully reduce costs for customers and address the region's energy affordability challenges."

Lamont said, "Utilities with record profits should not receive bonus profits for doing something they are required to do by law."

Blumenthal added, "Time to reassess this public utility model where companies are only interested in profits for Wall Street."

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