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October 1, 2015

Regulators approve variable power rate ban

HBJ File Photo Utilities deliver electricity to ratepayers, but consumers can decide who provides that electricity and the rate they pay.

Connecticut regulators have upheld the Connecticut General Assembly’s new law banning electricity suppliers from using variable rates, the first state in the nation to do so.

The Public Utility Regulatory Authority on Wednesday said the law that explicitly prohibits power suppliers starting Oct. 1 from signing up new customers or renewing existing customers to contracts where their electricity rates change each month is valid.

Competitive electricity suppliers offer ratepayers alternatives to standard service default utility rates, where ratepayers can choose a power supply that is cheaper, has more ecofriendly fuels or is catered to a unique energy usage, such as a manufacturer that doesn’t use power on the weekends.

Variable rates were intended to give ratepayers an option where they could take advantage of fluctuations in the energy market, as wholesale electricity rates can vary greatly month-to-month based on the price of fuels, the weather and other factors.

However, Connecticut suppliers ran afoul of regulators like PURA and the Office of Consumer Counsel by signing up customers at very low introductory variable rates and then locking them into longer term plans with much higher rates. Variable rates also became an issue in the winter when wholesale electricity prices would spike due to limited availability of natural gas to fuel the region’s power plants.

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