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Connecticut Small Businesses Could See Lower Electricity Rates Under Regulatory Change

  • Public Utilities Regulatory Authority approves change in electric rates offered to commercial customers of Eversource
  • Businesses may maintain a rate incorporating a demand charge or switch to a volumetric rate that charges per kilowatt-hour of electricity used
  • Many businesses found themselves paying a high fixed cost for electricity during the COVID-19 pandemic despite significantly reduced electricity use

Summary by Dirk Langeveld

Small businesses that receive their electricity from Eversource Energy will have the option of switching to an altered rate aimed at assisting companies whose electricity costs remained constant despite substantially reduced use during the COVID-19 pandemic.

The Public Utilities Regulatory Authority unanimously approved a change directing Eversource to offer businesses a volumetric rate, the same option used by residential customers. This charges by kilowatt-hour, or the amount of electricity actually used over a period of time.

PURA has also directed a reduction in Eversource’s demand charge component, or the fee charged to commercial customers for maintaining a constant supply of electricity. Businesses in Connecticut typically pay a fixed rate of $44 a month for their first two kilowatts of necessary capacity, plus $14.52 per kilowatt for each kilowatt of additional capacity needed. The extra capacity is determined based on the business’s highest electricity usage during a 15-minute period over the past year.

The latter model proved problematic during the pandemic, as businesses often used much less electricity due to a decline in consumer demand yet still had to pay the high fixed rate for electricity usage.

Eversource has more than 103,500 commercial customers who are operating on the rate that incorporates a demand charge. These customers can choose to maintain this rate or switch to a volumetric rate, with the change becoming effective on Nov. 1.

The issue has raised concerns among some Connecticut lawmakers on Eversource’s overall fee structure. These include how losses in commercial fees are likely to be passed on to other customers and how a 15-minute spike in electricity usage can impact a business’s electric rates for a full year.

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