In a move that some said will hurt many businesses and households in the Elm City already struggling with high electricity bills, United Illuminating announced last week it would seek the state’s approval for a significant increase in both residential and commercial electricity rates.

If the State Department of Public Utility Control approves UI’s proposed increase in rates when it meets on Dec. 8, electricity bills for households would increase an average of 38 percent, while businesses would see their rates double. UI spokesperson Al Carbone said his company will not make a profit from the rate hike because of the rising price of electricity, which has doubled from 6 cents per kilowatt/hour to 12 cents per kilowatt/hour within the last three years.

“We don’t make any profit [from the increase], so we have to pass those costs onto the customers,” Carbone said.

New Haven Deputy Director of Economic Development Tony Bialecki said a rise in electricity bills will have a serious detrimental effect on businesses in the city and could make New Haven less attractive for new businesses. Instead of increasing consumers’ costs, he said, the government should revisit the issue of deregulation of the public utilities sector.

“It will be extremely troublesome for a lot of businesses, especially manufacturing, but also for any kind of business that has a high utility cost as part of their operating costs,” Bialecki said.

The state legislature deregulated the electricity market in 1998, but the decision was criticized intensely by New Haven Mayor John DeStefano Jr.

Rising energy prices and regulation of the electricity market were issues that dominated this year’s gubernatorial campaign between DeStefano and Gov. M. Jodi Rell. During the campaign, he warned that electricity prices would rise in the months following the election.

“I think that it’s time to look at our deregulation law and to change it,” DeStefano said. “Electricity deregulation does not protect consumers or businesses, [and] it does little to control rate increases.”

Like Bialecki, Ward 23 Aldermen Yusuf Shah said a rise in electricity rates will impose an extra burden on community members, many of whom are already experiencing difficulties paying their bills. Residents with heating sources that operate using electricity only will be the hardest hit, he said.

If the new rates are approved, Connecticut’s electricity rates would become the highest in the continental United States, Connecticut Attorney General Richard Blumenthal said. The state needs to take a more active role in controlling the spiralling electricity prices of the last few years, he said in a statement released on Wednesday.

“This huge record-breaking rate increase will hit Connecticut like a tsunami,” he said. “Deregulation has become dysfunctional — victimizing consumers and our economy and providing humongous windfall profits to special interests.”

Rell said in a statement on Wednesday that the state urgently needs to introduce new policies to help reduce the cost of electricity, which is becoming increasingly unbearable for the state’s consumers and businesses.

“Our energy policies need to be changed, and Connecticut consumers and businesses should be contacting their elected representatives in Hartford to tell them so,” Rell said. “As I have been saying since July, I support a special session to address our energy policies.”

The rate increase, Carbone said, will continue for the next six months, until the contract UI has with its electricity suppliers expires. If fuel costs drop in the coming months, Carbone said, UI might lower its rates again for the second half of 2007.

Yale Director of Utilities Joseph Nadolny said the University will not be affected by any price increase as it has a separate contract due to expire in June.