With competition for residential customers nonexistent in Connecticut, or elsewhere, the Standard Offer should be extended indefinitely, using Portfolio Management and appointing a Builder of Last Resort to provide reasonable and stable electricity prices to Connecticut families.

Includes data on volatile prices and failure of attempts across the US at residential retail competition.

This testimony contributed to the adoption of a laddered purchasing requirement.

Volatile utility prices are very difficult for consumers, especially low-income consumers, yet bills have doubled and arrears have tripled. Natural gas and electricity prices have become much more volatile at retail as deregulation has made prices much more volatile at wholesale.

Includes data and charts, legislative language for "laddering" (portfolio management), and other strategies.

Electricity prices have risen as much as 34% since restructuring began in 1998. For low-income customers, the increase is as much as 47%. A shortage of natural gas nearly caused electricity blackouts last winter. Prices have also become much more volatile and are scheduled to increase by as much as 28% more as Sstandard Offer ends this month -- prices would go even higher under proposals pending at the FERC.

Policymakers should focus on price and reliability instead of choice. Low-income assistance should be restored and expanded. electricity and natural gas contracts should be lengthened further, with a laddered mix smoothing price volatility. Cost-effective efficiency and renewable energy should be expanded in order to decrease demand for natural gas and for electricity and thereby lower the price of both. A Builder of Last Resort should be appointed to build generation on a cost-of-service basis if the market fails to prevent blackouts. This will also help control prices.

Strategies and tactics for low-income advocates, using commodity procurement (Default Service, cost of fuel/fuel adjustment clause, portfolio management) as a case study. A two-page outline.

· Residential retail electricity competition is not working; · Electricity prices to residential customers should be reasonable and stable, and · A rolling average portfolio is an appropriate remedy, with a mix of contracts for residential customers of up to two years under current conditions.

There is a need for regulatory action to dampen price volatility to protect residential customers. Under current policies, there is a disincentive for Massachusetts gas utilities to reduce price volatility. Pre-approval of a limited menu of conservative purchasing practices could lower price volatility for customers without increasing risk for utilities.

Opposes the basing of residential default rates on wholesale spot prices.

· Low-income families need immediate relief from rising prices, including greater outreach efforts with respect to the low-income discount rate as well as expanded discounts and protections such as shut-off moratoria. · Various proposals that do not address the wholesale electricity market failure will not repair that failure. Such proposals include bidding out default service provision and artificially raising retail prices. · The Department has powerful tools at its disposal to address the wholesale market failure. These include its oversight of default service purchasing, its ability to require utilities to build plant if that is the most prudent option, and its oversight of demand-side management and demand response programs.

Sharp increases in energy bills during the winter of 2001 require regulatory action to dampen price volatility and its impact on low-income families, including: long-term purchasing of wholesale commodity, builder-of-last-resort for electricity, efficiency programs, and additional assistance.