CT Municipal Utility Rates vs Eversource & UI Costs

Connecticut residents pay some of the highest electricity rates in the country, and that frustration has renewed attention on an alternative that has existed quietly in the state for more than a century: municipal electric utilities.

The vast majority of Connecticut residents get their power from Eversource or United Illuminating, both privately-owned companies regulated by the state’s Public Utilities Regulatory Authority. But roughly 77,000 customers across seven smaller utilities get their electricity from publicly-owned systems, and they generally pay significantly less for it.

Those municipal utilities serve customers in Bozrah, Norwich, Groton, Wallingford, Jewett City and Norwalk, where both South Norwalk Electric and Water (SNEW) and the Third Taxing District operate. Some of these utilities also serve small portions of neighboring communities.

The savings are not marginal. For a typical customer using 700 kilowatt hours per month, municipal utility rates run between 23% and 64% lower than what Eversource and UI charge, based on publicly available rate data. Municipal officials point to several reasons for the gap: smaller operating scale, different electricity procurement methods, local tax exemptions, and the absence of a profit motive.

That last point matters. Investor-owned utilities answer to shareholders. Municipal utilities answer to ratepayers, who are also, in most cases, voters.

“The municipal model has been around since the very beginning of the electric era,” said Alan Huth, general manager of SNEW, which began operating Connecticut’s first municipal power plant in 1892. “When we started, it was only 10 years after Edison’s first generation plan on Wall Street.”

Most of Connecticut’s municipal systems formed in the late 19th and early 20th centuries, as local governments sought a public counterweight to the growing influence of private power companies. Over decades, consolidation reshaped the industry, with many smaller systems folding into larger regional utilities. Both Eversource and UI are now subsidiaries of multi-state holding companies.

The only modern example of a private system converting to public ownership in Connecticut is Bozrah Light and Power, which Groton Utilities purchased in 1995 for $5.4 million. That transaction points to one of the central obstacles facing any community that might want to replicate the municipal model today. Acquiring a private utility requires purchasing or leasing its physical infrastructure, including poles, wires and substations. For even a portion of an existing utility’s territory, that cost could run into hundreds of millions of dollars, or more.

Governance also differs from the investor-owned model. PURA does not regulate municipal electric utilities. Instead, local commissions set and review rates, with members who are either elected directly or appointed by local officials like mayors and city councils. All but one of the seven municipal utilities also maintain a consumer advocate, a local version of the state’s Office of Consumer Counsel.

That structure keeps rate decisions closer to the communities they affect, though it also means oversight quality can vary by municipality. Critics of expanding the model argue that larger utilities benefit from economies of scale and have more resources to manage grid reliability and capital investment. Supporters counter that the existing municipal utilities have demonstrated stable service while keeping rates well below the statewide average.

With Eversource and UI rates drawing persistent complaints from residents and legislators alike, the conversation about public power is unlikely to quiet down. Bills related to utility oversight and rate reform continue to circulate in the General Assembly, and advocates for expanded public power have grown louder about the municipal model’s track record.

The seven utilities serving 77,000 customers represent a small slice of Connecticut’s electricity market. But they represent something else, too: a working proof of concept that predates the modern grid and has outlasted decades of consolidation. For a state searching for answers on energy costs, that history may carry more weight than it has in years.