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News Feb 18, 2013 - 8:21:40 AM

AARP opposes governor's energy auction proposal

By AARP Connecticut

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Hartford, CT - AARP Connecticut has come out in opposition to a proposal contained in the Governor’s Budget that would switch electric service suppliers for hundreds of thousands of Connecticut ratepayers without their permission. Under the Governor’s proposal, the State would oversee an “energy auction” that would sell off the rights to provide electric service to Standard Offer customers to the highest bidder. Here’s how it would work:

· Residential customers and small businesses that are on the Standard Plan from UI or CL&P would be aggregated into groups. Competitive suppliers would then “bid” to take over as the electric supplier for those customers.

· The state will then decide which company will supply electric service for hundreds of thousands of households and small businesses.

· The bidders only have to promise a 5% savings for one year. There is no guarantee of savings after the first year.

· Winning bidders will pay the State an estimated total of $80 million for taking over these customers.

· Customers who have been forced to change suppliers could then switch to a different supplier, but the proposal does not guarantee they won’t be charged a termination fee.

· The Standard Plan would become a short-term option and as such, the rates charged would be subject to volatile short-term energy market prices.

According to AARP State Advocacy Director, John Erlingheuser, “Taking away electric ratepayers’ right to choose and forcing them into the competitive supply market will have a long-term negative impact, especially on the elderly. While the Governor’s proposal might seem appealing in the first year, there is no guarantee of long term savings. The proposal eliminates an important benchmark that customers use to compare the cost of plans offered by electric suppliers, allowing prices to rise unchecked in future years.”


AARP conducted a poll of 800 Connecticut residents age 50+ in April 2012 which found overwhelming support for a Standard Plan option for electricity, as well as requiring distribution companies to offer a Standard Plan option. According to the poll:

• Two-thirds of respondents said it is extremely or very important for customers to have a standard plan to use as a price point when comparing plans from alternative electricity suppliers. Another 20 percent said that it is somewhat important to have the standard plan.

• 82 percent supported the requirement that Connecticut distribution companies continue to provide the standard plan to customers.

“AARP fought for years to lower electric rates in Connecticut, by reforming the way the state purchases electricity to ensure the lowest rate possible,” Erlingheuser said. “Because of the market reforms AARP fought for as a part of Public Act 11-80 consumers are finally reaping the benefits of a lower Standard Plan. This proposal puts in jeopardy the progress we’ve made in creating a fair and stable electric market and we urge lawmakers to respect their constituents’ right to choose.”

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