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Connecticut’s commercial and industrial businesses have been facing significant increases in their Eversource Delivery charges, with many seeing spikes from 35% to as much as 55% or more. This steep rise, primarily driven by the July rate adjustment, has left many business owners grappling with how to manage the impact on their bottom lines.
The key driver of this increase is related to the kilowatt-hours (kWh) delivered by the grid, rather than kilowatt (kW) demand. In fact, while the kW demand charge has decreased, the cost associated with kWh delivery has surged. Approximately 80% of this increase is attributable to the Federally Mandated Congestion Charge (FMCC). The FMCC, billed on a per kWh basis, funds several state-mandated energy programs, including renewable energy initiatives and demand response programs. Ironically, this means that electricity consumers not participating in these programs are subsidizing those who do.
Understanding the FMCC and Its Impact
The FMCC Charge includes costs for several state-mandated programs, such as:
The Millstone energy contract
Distributed resource generation programs
Long-term renewable energy contracts
The Low-Emission Renewable Energy Credit (LREC) and Zero-Emission Renewable Energy Credit (ZREC) Programs
The Solar Home Renewable Energy Certificate (SHREC) program
Passive Demand Response Programs
While these initiatives aim to bolster Connecticut’s energy sustainability and resilience, they also significantly drive up costs for businesses that rely heavily on the grid for their electricity.
Mitigating the Impact: What Your Business Can Do
Despite the steep increase in delivery charges, businesses have several strategies at their disposal to mitigate these costs and reduce exposure to future market volatility:
1. Reduce kWh Delivered by the Grid
Cogeneration Solutions:Â Consider installing natural gas-fueled cogeneration units such as turbines, reciprocating engines, or fuel cells. These systems can generate electricity on-site, further lowering your reliance on grid-supplied power.
Solar PV Systems:Â Solar power can offset a substantial portion of your energy needs, directly reducing the amount of electricity you pull from the grid.
Energy Efficiency Upgrades:Â By implementing energy efficiency measures, businesses can significantly cut down on their overall electricity consumption. This includes upgrading to energy-efficient lighting, HVAC systems, and industrial equipment.
2. Participate in Demand Response Programs
Businesses can participate in ISO-New England and utility demand response programs, which provide financial incentives for reducing electricity usage during peak demand periods. These revenues can help offset the increased delivery charges.
3. Explore Third-Party Electricity Providers
Purchasing electricity supply from a third-party provider can offer more favorable terms than what’s available directly from Eversource. Some providers offer programs that pass 100% of supply kWh cost reductions onto customers, especially those participating in the ISO-New England Capacity Tag reduction program. This could be a more cost-effective way to manage energy expenses.
Take Control of Your Energy Costs
The recent increase in Eversource Delivery charges highlights the importance of proactively managing energy costs and consumption. By taking strategic actions, Connecticut’s commercial and industrial businesses can reduce their exposure to rising costs and contribute to a more sustainable and resilient energy future.
At Resource Development Associates, we understand the challenges posed by these rate increases and are here to help you explore and implement effective energy management strategies, and connect you to the best solutions for your business. Contact us today to learn how we can assist in mitigating your energy costs and safeguarding your business against future volatility.
We Power Business.
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