The Daily Campus editorial board’s opinion on Thursday calling for UConn to “ditch Eversource” is wholly misinformed and irresponsible.
Eversource, in their Connecticut service territory, is a regulated public utility with a natural monopoly on electricity distribution. If thoughts of twentieth-century trust-busting are rushing to your head, forget them. Electricity distribution is entirely different from power generation, and understanding the way UConn procures and produces energy must come before posing a radical overhaul.
Take a look at your parents’ electric bill, be they a ratepayer to Eversource, United Illuminating, ConEdison, National Grid, or most other utilities in the Northeast. There are generally two halves: the “supply” and “delivery” charges. These big-name utilities only make money on the delivery component of that bill, which pays to maintain power lines and substation infrastructure, trim vegetation along the lines’ rights-of-way and fund certain company operations. This delivery rate is set by state regulators, like Connecticut’s quasi-judicial Public Utilities Regulatory Authority (PURA), which pursues a lengthy regulatory proceeding every few years called a “rate case.” In a rate case, the regulator opens up the utilities’ books, hears testimony, and determines a “just and reasonable” rate that the utility will charge customers to safely keep the lights on while earning the company a fair profit. No stone is left unturned.
The “supply” component of the bill, which doubled on New Year’s Day, is a whole different animal. That’s the one inflicting economic pain on everyone right now. Public utilities like Eversource don’t profit off the generation of electricity because they don’t own any power generation facilities, like nuclear power stations, natural gas power plants, solar panels and wind farms. Their predecessors were forced to sell off their generation fleet in the 1990s when many U.S. states’ electric power and gas industries were deregulated to lower electricity prices and improve grid reliability. Connecticut’s power facilities, for instance, are privately owned and bid their energy into ISO New England’s regional interstate wholesale electricity markets, whose tightly-regulated market rules fall under the Federal Energy Regulatory Commission’s jurisdiction. In the winter, insufficient pipeline capacity and soaring global spot prices have spiked natural gas prices in New England. Over half of the region’s installed generation capacity relies primarily on natural gas, and marginal fuel prices impact wholesale electricity prices, which mainly rise and fall based on power demand and supply bids from hundreds of market participants. It’s all economics.
Where does Eversource come in? Eversource manages the lines carrying electricity to UConn. For most other customers, Eversource also procures the cheapest mix of electricity on ISO New England’s wholesale electricity market – within renewable portfolio requirements and transmission constraints – and passes it through to ratepayers at a fixed retail rate that resets twice a year. Neither Eversource nor PURA nor ISO New England can just “set” the electric supply rate. Competitive market forces do that for them. Furthermore, UConn purchases Renewable Energy Certificates (RECs) for its imported electric supply, meaning Eversource’s standard offer — the rate that doubled last month — doesn’t even affect Storrs. The suggestion that rate hikes are disproportionately harming UConn is wrong. Limited natural gas availability during cold snaps that force some of the Co-generation plant’s turbines to burn oil reaps a far greater cost.
Eversource Energy Center within the Innovation Partnership Building produces cutting-edge research that helps the utility improve grid resilience, protecting people from storm-inflicted blackouts and attacks on the grid while helping interconnect more renewables. This invaluable partnership has nothing to do with UConn’s Eversource interconnection off North Eagleville Road, as the editorial board appears to suggest, that actually keeps Storrs alive whenever the Co-generation plant can’t support 100% of campus loads. UConn has limited transmission line capacity, as is, from Eversource – meaning we can’t pull 100% of our electricity from the grid, either. As a transmission owner, they also have little incentive to invest millions in building more lines out to UConn when the Co-gen is sufficient most of the time. If we’re talking about “ditching” the sole electric utility in our neck of Connecticut, that would mean illogically decoupling UConn from the greener New England grid, stranding our campus, and presenting severe safety risks to all of us.
In a nutshell, Eversource doesn’t just “set” rates arbitrarily because they have no incentive. In reality, they have little control over power generation. The only monopoly they hold is over the ownership of wires hanging above us, not the current flowing through them. The suggestion that UConn is being exploited by Eversource misunderstands the industry.
What a poorly written article with no true facts!! Eversource not owning any power generating is laughable. Have you looked to see how many companies they wholly own??