Can Eversource, UI and regulators learn from town-run utilities with lower electric rates like Wallingford?

WALLINGFORD — The latest potentially steep rise in electric rates, as revealed in documents Eversource and United Illuminated filed with the state last week, reflects the challenge of controlling costs in a complex electricity market, against a similarly complex and contentious regulatory landscape, according to industry experts.

Average household customers could start paying an extra $38 a month this spring, according to the Eversource filing, while UI asks for a rate increase of around $26 a month or about 12 percent. 

The news met with continued frustration last week from state lawmakers and other officials, along with ratepayers in cities and towns around Connecticut — with a few notable exceptions.

In Wallingford, most residents get their electricity from a municipal utility with rates about 40 percent lower than Eversource, according to data from the town and independent analysts.

It's often used as a selling point for economic development and in local political campaigns, but do municipal utilities offer insights for the broader market?

The Wallingford Electric Division is not immune from controversy, particularly as leaders seek to modernize its structure while preserving the legacy of a more than century-old utility and its benefits to residents. By and large, however, the town-appointed Public Utilities Commission has maintained operations without major changes in municipal control, or the comparative value the local utility offers customers.

So what if anything can the major electricity providers, or state policymakers and regulators for that matter, learn from Connecticut's small cohort of municipal utilities?

'Size and situation'

Wallingford operates one of just eight municipal power utilities in Connecticut, founded on Dec. 23, 1899. By contrast, most state residents receive service from either Eversource or UI, paying some of the nation's highest prices for electricity.

According to Robert Beaumont, chairman of the Wallingford Public Utilities Commission, there has been considerable change over the last 25 years since the PUC marked the 100th anniversary of the division.

According to officials, the Electric Division's smaller size and lower degree of regulation allow greater flexibility and purchasing power from the wholesale market. 

“Given our size and situation, that we aren't regulated by the Public Utilities Regulatory Authority of the state of Connecticut, we feel like we're more nimble and flexible in how we go about procuring our wholesale power than the Eversources and the UIs of the world," said Director of Public Utilities Richard Hendershot. "That’s my interpretation. This is just me talking, I don't know this to be so, but just the way they're regulated puts them at something of a disadvantage to us.”

Companies with considerable need for power, such as Ulbrich Stainless Steel and Specialty Metals, Amphenol, Rowland Technologies, United Concrete Products, and others have made their home in Wallingford. In more recent years, Amazon has been one of the largest companies to come to Wallingford, opening a sorting center at 29 Research Parkway. 

Today, town officials remain confident about the longevity of the Electric Division, but note that they have been dealing with a persistent shortage of staff, and are hoping to bring in more people to fill general lineman and engineering roles. 

“It's a matter of getting some of the other positions filled, and that's just an ongoing thing," Beaumont said. "Part of the issue sometimes is trying to get people for certain of the positions, and I'm thinking it's things particularly where it's hands-on.

“So much today is geared toward doing things just in front of a computer or whatever, and that's fine," he added. "But there are less people it seems who want to do things with their hands … there seems to be comparatively less of a pool for that than what perhaps there used to be."

Co-op dispute, Pierce Plant future

Another change was Wallingford withdrawing from the Connecticut Municipal Electric Energy Cooperative, which is a Norwich-based energy cooperative that purchases power contracts from the wholesale market and puts them into a pool that serves all of its member municipal utilities. In late 2013 it was discovered that because of a misinterpretation of their shared contract, CMEEC had been overcharging the town for shared projects, according to Wallingford PUC officials. 

This led to the termination of their mutual partnership and a lengthy arbitration that ended in 2019, which saw the town awarded $3,670,000. Since the termination, the two organizations have maintained limited contact, according to Hendershot. The town also gained $7.34 million in power savings by becoming independent from the organization.

The Pierce Plant, one of the power generating stations located at 163 East St in Wallingford, was once leased by CMEEC, but now Hull Street Energy  leases the space after having taken over from CMEEC in 2006. Last year, Hull Street reached an agreement with the town so that it relinquished the right of first refusal should Hull Street seek to sell its lease of the power plant. The issue is that should the company choose to leave the plant, it would leave all the equipment behind, which the town estimated to have a $20 million decommissioning cost. 

There was some concern at the time that the group might be planning to leave the plant, but according to Hendershot that isn’t the case. He says Hull Street has been a good tenant and shall remain there for the foreseeable future. Even should the company decide to leave, he said, the station operates only for part of the year and doesn’t contribute much overall to the town’s power needs. 

Looking ahead

Officials say they're cognizant of the need to improve the grid for electric vehicles as demands increase in the future, installing more charging stations and gradually improving infrastructure over time. 

“We are constantly maintaining and upgrading anything that needs to be done. And we try to stay ahead of the curve,” Beaumont said.

Mayor Vincent Cervoni reiterated his commitment to keeping the Electric Division a strong component of the town’s future, believing it is a business driver. One of the major projects of his administration is the implementation of a new online portal, so residents can pay their power bills directly on the town’s website. 

“It is certainly worthy of celebration and I think we're among the first and among the longest-standing municipal utilities that provide electricity and we're certainly very proud of it,” Cervoni said of the 125th anniversary. “We are certainly going to keep this a cost-efficient and reliable utility. We're also going to make it easier for people to pay and track their bills with online service coming up in the near future.”

Correction: This story has been updated to reflect the company leasing a portion of the Pierce Plant is Hull Street Energy.