State urged to create power authority

HARTFORD, CONNECTICUT - A national expert on energy deregulation urged Connecticut lawmakers to create a power authority to provide investor-owned electric utilities with competition.

Robert McCullough, managing partner of McCullough Research of Portland, Ore., said a state-run power authority would create a more transparent process that would ultimately benefit ratepayers.

"Because this is not a transparent process, it does not make financing (power plants) easier," McCullough told members of the General Assembly's Energy and Technology Committee.

Creating a state power authority "would bring some much-needed financing muscle to play," he said. That would likely spur an increase in the construction of new generation plants, which would drive down the price of electricity in Connecticut, McCullough said.

"We do not have much competition, we do not have large numbers of buyers and sellers (in the marketplace)," he said. "The situation here in Connecticut is the worst of the worst."

Part of the problem with the state's deregulated electric marketplace is that it is modeled after a system that led California to soaring electric prices and rolling blackouts at the start of the decade, McCullough said. His company was retained by a group of Pacific Northwest utilities and industries in 2000 to investigate the high prices in the Western energy market.

Two years later, testimony from McCullough before the U.S. Senate helped convince the Federal Energy Regulatory Commission to launch an investigation that has resulted in numerous criminal charges and sanctions against market manipulations. FERC staff's final report endorsed McCullough Research's analysis and his testimony was a major component of the $1.6 billion judgment against Enron in summer 2007.

The Energy and Technology Committee chairman, Rep. Steve Fontana, D-North Haven, and Vice Chairwoman Rep. Vickie Nardello, D-Prospect, said they believe that electric prices are artificially high. Fontana said he supports the creation of a state power authority as one way to combat high electric prices in Connecticut.

Another is to allow the state's incumbent electric utilities, United Illuminating Co. and Connecticut Light & Power Co., to enter into long-term purchase power contracts, deals that would be a decade or more in length.

"We have the means to fix it," Fontana said. "The question is do we have the political will to do it?"