Why are Connecticut's electricity prices so high? 

A rate hike in July has many customers feeling outraged. 

Even before the spike, Connecticut consumers were paying some of the highest energy prices in the country. Why?  

“Our prices are a reflection of a complex set of regulations,” University of New Haven economics professor Brian Marks said.  

The state’s two major suppliers, Eversource and United Illuminating, only deliver electricity, meaning neither produces their own.  

They buy much of that energy from out of state – in fact, from outside New England. That drives up costs in two ways. 

First is the fact that energy can fluctuate based on various market factors, including ongoing wars in Ukraine and Israel.  

“The world energy prices do feed back into U.S. energy prices,” Marks said.  

That energy also has to get to Connecticut but accomplishing that also requires energy. That’s one reason energy-producing states have lower costs.  

Then there’s the cost of maintaining and upgrading Connecticut's electric grid so that it can withstand both harsh winters and severe summer storms.  

“The delivery cost of the electricity has been rising due to the costs associated with maintaining those lines,” University of New Haven engineering professor Ali Golbazi said.  

For example, Eversource and UI pay for storm cleanup and then seek reimbursements in the form of rate increases.  

The Public Utilities Regulatory Authority approves those requests, but there are limits to the agency’s ability to deny one.  

Golbazi said burying powerlines underground could be more cost-effective in the long run by protecting wires, but the change would require major investments upfront.  

Demand also plays a major role, and not just because customers pay based on the energy they use.  

Electricity prices fluctuate based on demand. People can try to reduce how much they use, but Golbazi said new technologies can drive that demand back up.  

So what can government officials do to keep costs down?  

One extreme would be to set price limits, but Marks warns against that. He said suppliers may be more inclined to prioritize states without limits when selling energy.  

That, in turn, could lead to shortages in Connecticut, especially during peak demand periods.  

“The consequence will be is people queuing up or people not getting the energy they need,” he said.  

Many consumers are raising frustration over the public benefits portion, which is the product of policies set by elected officials.  

The July 1 increase is the result of a deal to help keep the Millstone Power Plant open and the cost of unpaid bills thanks to a moratorium on shut-offs during the pandemic.  

Even though those policies are driving the current spike, experts say it’s not the main reason Connecticut has traditionally been among the most expensive states for electricity.  

“Public policy does play a role here, but there’s no silver bullet,” Marks said.  

Golbazi said the real solution is going to take improvements to the grid and new technologies, such as sensors that help appliances use less electricity when demand is higher.  

“To reduce the cost of the electricity, I don’t see that happening in the near future,” he said.