About Electric Restructuring

In 1998, the Connecticut General Assembly passed legislation to deregulate electricity generation in the state effective January 1, 2000. As a result, competitive suppliers (not CL&P) now own the power-generating plants, and energy is bought and sold in a wholesale market on a regional basis.

Deregulation opened the generation portion of your bill (shown as Supplier Services) to competition. This essentially made power generation a market-based good with the price dictated by supply and demand, just like a cell phone or bag of potatoes. At the time, this made sense. Competitive markets often lead to more innovation and lower costs for customers. A good example of deregulation that worked is long-distance telephone service.

Unfortunately, the benefits of competition never materialized for electricity consumers in Connecticut. Competitive wholesale generation markets pressured by rapidly rising fuel costs, as well as a lack of new power plants, have caused electricity prices to soar. In fact, the cost of the competitive portion of electricity supply increased three-fold since 2000, caused in part by the rising worldwide cost of fuels like oil and natural gas. Also, many retail competitive suppliers found it uneconomical to sell directly to residential consumers. It was cheaper for most residential customers to stay with the power companies who have served the state for decades, such as CL&P.

Today, most customers continue to rely on CL&P to purchase their power for them. For customers who do not choose competitive suppliers, we scour supply markets to procure the lowest-price power. CL&P buys this supply for these customers through competitive solicitations in the New England wholesale power market and passes those costs through to customers without any markup.

All customers continue to rely on CL&P to deliver their power, wherever they buy it. Delivery of electricity is CL&P’s foremost task and we have kept these costs, which we control, relatively stable compared to the cost of competitively supplied electricity generation. We are dedicated to keeping the costs we do control, transmission and distribution, as low as possible. In addition, we actively promote and implement energy-efficiency programs that help customers save energy and money.

Today, who does what?

There are three main components of the electricity system: generation, transmission and distribution. At CL&P, we don't generate electricity; we deliver it — to more than 1.2 million business and residential customers.

First is GENERATION

• Electricity is produced at a generating plant, using various sources such as natural gas, coal and nuclear.
• The Independent System Operator - New England (ISO-NE) manages the electricity grid (generating plants and the transmission system) and administers the wholesale electricity marketplace for New England.

Next is TRANSMISSION

• Electricity is moved from the generating plant across long distances through transmission lines.
• In order for the electricity to travel long distances from the plant to other destinations, it must be kept at a very high voltage.
• Substations then take the incoming high voltage electricity and "step it down" to a lower level voltage, allowing it to be connected to the local distribution system.
• The Federal Energy Regulatory Commission oversees the transmission grid and set the allowable rate of return for capital investments.

And finally DISTRIBUTION

• The local distribution system, made up of several types of lines, takes the electricity from the substation and delivers it to businesses, homes and schools.
• The Connecticut Department of Public Utility Control regulates the distribution of electricity and sets the distribution charges.