Eversource requests winter rate hike for electricity which is substantially less than last year



Last modified: Monday, November 23, 2015

Eversource customers in western Massachusetts will see a 6 percent increase over current prices in their monthly electricity bills this winter, if a new basic service rate filed with state regulators Wednesday is approved. But that figure is substantially lower than the roughly 60 percent spike caused by last winter’s record high wholesale electricity prices.

The new rate, 10.394 cents per kilowatt-hour, would be a 27 percent drop from last year’s 4.288 cents per-kilowatt-hour winter rate. Eversource spokeswoman Priscilla Ress said in a statement the new rate would see the average ratepayer’s bill drop by about 16 percent compared to last winter, from $121 to $102 per month.

Last winter’s filing saw a 29 percent hike in the average bill.

The new rates would go into effect Jan. 1, pending approval by the state Department of Public Utilities.

“Eversource is delivering welcome savings to its customers in western Massachusetts after receiving electricity supply prices from power plant owners that are lower than last winter’s historic highs,” said Ress.

Eversource delivers electricity about 1.4 million customers in 140 Massachusetts communities, including many in Hampshire and Franklin counties.

The company’s current rate, which took effect July 1, is 9.767 cents per kilowatt-hour. The basic service rate represents a pass-through cost of the price electricity generators charge for wholesale electricity, and represents roughly half of a monthly electric bill. The company’s distribution charge, the portion that is profitable for the utility, makes up the other half.

Eversource’s modest increase stands in contrast to National Grid’s announced rate filing in September of roughly 13 cents per kilowatt-hour, a 41 percent increase over this summer’s rate of 9 cents per kilowatt-hour. Last winter, National Grid’s rates nearly doubled.

The utilities, which are owned by investors, as opposed to municipally-owned utilities such as Holyoke Gas & Electric, have attributed last season’s dramatic spikes to a shortage of capacity along the natural gas pipelines that feed many of the region’s generators.

During the winter, local distribution companies that sell gas for residential and commercial heating have priority on gas supply due to the long-term contracts they enter with pipeline companies. Power generators, on the other hand, typically purchase their gas on the spot market to match the fluctuating power needs. If demand for heating is high, there is a chance the generators could find themselves caught without enough supply to run economically.

Gas is typically cheaper in the summer months as demand for heating tapers off.

A number of proposals said to be ways to alleviate that problem — including Kinder Morgan’s controversial Northeast Energy Direct pipeline project — are in various stages of review. Eversource is a partner on the Spectra Energy’s Access Northeast pipeline project.

Last winter’s increases were based on conditions experienced during the winter of 2013-2014, when shortages of natural gas caused the price to soar. Generators, in turn, anticipated a similar situation occurring last winter and submitted higher bids to the utilities.

This past winter, however, those same conditions largely failed to materialize due in part to increased importation and use of liquefied natural gas (LNG) and market reforms by ISO New England, the semi-independent organization that operates the region’s electric grid.

Opponents of further natural gas infrastructure expansion in the region have pointed to energy-efficiency programs, renewable energy resources and increased imports of LNG as alternatives to new pipelines.




 


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