Why nearly 10,000 in Norwalk won't see their electric bills increase

Customers of South Norwalk Electric and Water, which provides utilities to about 6,500 in the Second Taxing District, will not face same the electric bill increases as Eversource and United Illuminating customers.

Customers of South Norwalk Electric and Water, which provides utilities to about 6,500 in the Second Taxing District, will not face same the electric bill increases as Eversource and United Illuminating customers.

File photo

NORWALK — While Eversource and United Illuminating customers are expected to see a monthly average increase of about $80 in their electricity bills come the new year, thousands in South and East Norwalk will not face the same rate hike.

South Norwalk Electric and Water, which provides utilities to about 6,500 customers in the Second Taxing District, and the Third Taxing District, which supplies electricity to about 3,000 customers in East Norwalk, are exempt from the fluctuations in the energy market, their general managers said.

Connecticut's two industry-owned electric companies, Eversource and United Illuminating, announced last week a cost increase in January, bringing bills up by an average of more than $80 per month. Eversource is Connecticut's largest utility with nearly 1.3 million customers in 149 municipalities, while United Illuminating serves about 340,000 in the Bridgeport and New Haven areas as a subsidiary of Orange-based Avangrid.

The price hikes are due to a sustained increase in natural gas prices on the supply component of bills that represents about half of the total monthly cost.

In Norwalk, however, SNEW and TTD customers will not face those price increases.

"SNEW and TTD are part of the same cooperative who does all of our purchasing," TTD General Manager Kevin Barber said.

"We are not forecasting an increase in any of our rates. If the energy market goes crazier and the cost of purchasing power goes even higher and higher, we may be forced to."

As municipal-owned companies, SNEW and TTD costs are regulated by the Connecticut Municipal Electric Energy Cooperative.

“We buy wholesale electricity in a different process through CMEEC,” SNEW CEO and General Manager Alan Huth said. “It all has to do with purchase power agreements. CMEEC was able to arrange purchase power agreements way ahead of time at lower wholesale costs.”

CMEEC is owned and governed by six member utilities: The cities of Groton and Norwich, the borough of Jewett City, Bozrah Light & Power Company and the Second and Third Taxing Districts of Norwalk, according to the nonprofit.

“Connecticut and all of New England rely on natural gas as a primary fuel source for the production of electricity,” CMEEC said in a statement. “The cost of natural gas has significantly increased due to a variety of factors, including inflation, constraints on the interstate natural gas pipeline system, the anticipated increase in winter demand for natural gas used for home heating, and the war in Ukraine. These are all factors beyond our control.”

In the purchasing agreement, CMEEC plans for fluctuations to protect customers from price changes that happen when power is purchased “all at once or based on a rigid schedule.”

SNEW and TTD use a rate stabilization fund for extra support.

“We also maintain a rate stabilization fund, so we draw down on that rate stabilization fund to help insulate customers from dramatic spikes in energy market,” Huth said. “We pride ourselves — it’s our goal to have lowest cost we can for our customers.”

The rate stabilization funds are used to mitigate the impact of short-term price spikes in the wholesale energy market, Huth said.

“When wholesale energy prices decline, the rate stabilization funds are replenished and can be used to mitigate the next significant increase in electric rates, or for other utility purposes,” Huth said.

The recent retail rate increases for the Member Municipal Electric Utilities have ranged from 8 percent to 20 percent, Huth said.

CMEEC CEO Dave Meisinger said the purchasing agreement has managed wholesale costs that become the basis for much of the retail electric rates.

“Our purchasing strategy mandates the purchase of blocks of power over different time periods to meet current and future power needs, enabling us to smooth out price volatility and make prices more predictable,” Meisinger said. 

Abigail Brone can be reached at abigail.brone@hearstmediact.com.