Connecticut bill aims to cut electric costs, but may stifle clean energy

Yahoo

28-04-2025

Connecticut lawmakers are touting newly introduced legislation as a way to lower out-of-control power bills, but opponents say it could devastate the state's renewable energy progress. Provisions of the complex, 80-page bill would scale back incentives for residential solar and make nuclear power eligible to earn renewable energy credits, directing essential funds away from other types of clean energy developments.
'It's a direct attack on the growth of solar and wind in Connecticut, an attack on new resources that reduce pollution,' said Chris Phelps, state director of advocacy group Environment Connecticut.
Connecticut's high electricity rates — its residential prices were the second highest in the country in February — have been the subject of much discussion among lawmakers this session. Many of these conversations have, explicitly or implicitly, revolved around the largely unfounded notion taking root across New England that clean energy programs are driving high prices.
That belief is the basis of some provisions in SB 1560, a sprawling piece of legislation introduced earlier this month by Democratic Sen. John Fonfara, chair of the Finance, Revenue, and Bonding Committee. Fonfara, who announced his plan accompanied by legislators from both sides of the aisle, claims the bill would create immediate savings for Connecticut consumers. At a hearing for the bill in mid-April, dozens of people and organizations testified, some in support of the lower costs the bill promises, many opposed to the dangers they say it poses to renewable energy.
The proposed legislation includes several sections that do not explicitly address clean energy. It calls for the creation of an in-state procurement authority to watch the power markets and, ideally, buy electricity at better prices. The bill would also eliminate the sales tax on electricity purchased by commercial and industrial users, and mandate an expansion of variable time-of-use rates, which nudge households to use less energy during high-demand times by raising the price of electricity.
Renewable energy advocates, however, are focused on three elements they claim would completely undermine state support for clean energy and energy-efficiency programs without creating any overall savings for the public.
The first measure that worries advocates is a small wording change that would define existing nuclear power generation in the state — a category that includes only the Millstone Power Station — as a Class I renewable energy source. This designation would allow Millstone to sell renewable energy credits (RECs) as part of the state's renewable portfolio standard.
Under the standard, utilities must buy RECs to offset a certain percentage of the power they sell. That proportion rises over time: This year, for example, Connecticut utilities must procure enough renewable energy to meet 30% of their power sales; next year, that bar jumps to 32%. By encouraging a market for renewable energy, this requirement lowers the emissions from Connecticut's power supply. Plus, renewable energy developers can use revenue from selling RECs to finance new projects.
If Millstone were allowed to sell Class I RECs, it could do so at much lower prices than other clean energy sources because the nuclear plant is already built and running without this added financial support, said Francis Pullaro, president of renewable energy nonprofit RENEW Northeast. A flood of cheap credits from Millstone would lower the market price for RECs across the board. While utilities could pass those savings on to customers, advocates warn that REC prices would almost certainly drop so much that they no longer provide enough revenue to renewable energy developers to support new projects.
There would also be little need for solar or wind RECs in the market if Millstone were allowed to sell credits. In 2023, the plant generated 33% of the power consumed in Connecticut, while utilities only needed to meet 26% of their total energy sales with renewable energy. This dynamic could imperil existing renewable energy operations that count on REC revenue, and prevent new projects from penciling out, Pullaro said.
The effect would be to render the renewable portfolio standard essentially meaningless, he said.
'By doing this you're effectively repealing the [renewable portfolio standard] because it's no longer going to be available to incentivize new developments,' he said. '[The nuclear plant is] already built and doesn't need RPS revenue. You won't have any renewable resource able to compete with that.'
Another major issue advocates have flagged in the bill is a proposed change to how homeowners with solar panels are compensated when their systems generate extra power that flows onto the grid, a process called net metering. The legislation would allow homeowners to receive credit only for the supply of excess power they generate, and not for the costs of distribution or transmission, which are currently part of the compensation calculations. The rationale for this change stems from a concern that customers without solar will find themselves footing the bill for compensating households with solar.
The new rule would make rooftop solar 'unrealistic' for most homeowners, Phelps said, but wouldn't make much of a difference for everybody else. There is just far too little solar deployed in Connecticut to create the kind of cost shift the bill is trying to avoid, advocates said. In 2024, just over 4% of the electricity consumed in the state was solar, according to the Solar Energy Industries Association.
'We in Connecticut have relatively little solar compared to other New England states,' said Bernard Pelletier, vice president of People's Action for Clean Energy, a statewide advocacy group. 'This would just make us have less.'
The third area of concern for advocates is the bill's proposal to eliminate the public benefits charge from customers' power bills. That's a fee that helps pay for energy-efficiency programs, a state clean energy fund, assistance to low-income customers, mandated nuclear power purchases, and other energy-related public policy programs. The legislation would create a Green Bond Fund that would borrow money to pay these costs, removing them from monthly bills and spreading out the financial impact over the bond repayment period.
Many advocates, however, worry that this approach would result in less certain funding for the energy-efficiency and clean energy programs currently supported by the public benefits charge. As outlined in the legislation, the bond fund would be able to spend up to $800 million annually, yet the expenses for programs included in the public benefits charge were $868 million in 2023 and $1 billion in 2024.
The bond fund 'would be unlikely to consistently cover the costs of these programs, and it is unclear how and when decisions would be made regarding funding levels for each program,' Katie Dykes, the state's commissioner of energy and environmental protection, said in testimony filed with the legislature.
The Finance, Revenue, and Bonding Committee voted favorably on the bill last week, and it is now expected to go to the Energy and Technology Committee for further consideration and likely amendment. When that happens, Phelps hopes legislators leave behind the portions that could undermine renewable energy progress.
'While I appreciate the rhetorical support for clean energy, the policy details of this bill would really take a huge step backwards,' he said.