National Grid’s 1 million basic service electricity customers will see their monthly bills drop in May, but rates aren’t returning to the level they were last summer and they will be significantly higher than what customers in New Hampshire are paying.
The utility buys electricity on behalf of its basic service customers every six months. Over the winter, rates hit a record 16 cents a kilowatt hour and were expected to fall back this summer. National Grid said prices will fall to 9.3 cents a kilowatt hour this summer, but won’t drop back to the 8-cent level where they were last summer. For a typical customer using 500 kilowatt hours a month, this summer’s rates will yield monthly charges that are $32 below the winter rates and $5 above last summer’s rates.
Grid said the higher year-to-year prices are “due to higher wholesale electric prices in New England brought on by natural gas interstate pipeline constraints impacting the region.” The utility added: “New Englanders should be advised that though these power supply costs generally reflect a reduction in bills for the summer months, bills are likely to increase again next winter because of ongoing pipeline constraints.”
The National Grid prices for this summer are significantly higher than what Liberty Utilities in New Hampshire is charging its customers. Liberty, which also buys electricity on behalf of its customers, is planning to charge its customers 6.8 cents a kilowatt hour this summer, down from 15.4 cents over the winter. The drop of 55.6 percent represents a savings of $47.25 on a typical monthly bill.
Grid spokesman Jake Navarro said the difference in prices between the two utilities reflects the regulatory environments in the two states and possibly the timing of the electricity purchases. Massachusetts rates reflect much higher charges for clean energy policy initiatives, which boost the rate for a kilowatt hour by more than 2 cents. Renewable energy charges in Massachusetts alone add about 1.6 cents a kilowatt hour to the bill, compared to .6 cents in New Hampshire.
Massachusetts’ energy efficiency programs, which use ratepayer dollars to finance initiatives to reduce energy consumption, save money overall because the cost of the programs is less than the cost of electricity generation. Indeed, Massachusetts leads the nation in energy efficiency efforts. But a number of studies suggests the cost of these programs in Massachusetts is higher than in any other state.
Matt Golden, a principal with Efficiency.org, wrote an article for Greentech Media in December in which he said the top-down approach used in Massachusetts may not be the best. “Massachusetts may spend the most per capita on energy efficiency, but it is, in fact, the least efficient state in the country at delivering savings,” he wrote.
Electric rates will continue to rise because the state and regional regulators are impacting the wholesale markets with renewable energy mandates to replace fossil fuel with wind and solar power. The plans, policies and regulations put forth by the Executive Office of Energy and Environmental Affairs is flawed. The regulations are eliminating coal as planned but they are also eliminating clean energy nuclear. Coal and nuclear are being replaced with natural gas, leaving the system vulnerable to NG shortages that are skyrocketing rates.
We need to wait until wind and solar become competitive and let the market sort out the winners. Bureaucrats on Beacon Hill are subject to too many political influences and can never succeed in transitioning to a clean energy future without killing the economy.
It is worth pointing out that Massachusetts’ energy efficiency programs have higher net benefits and result in much greater benefits to customers than New Hampshire’s smaller programs. Recent studies by ISO-New England have found that Massachusetts’ energy efficiency investments have significant reduced peak demand and energy load, while New Hampshire’s demand will continue to grow (see here: http://bit.ly/1BOfzdj).
The article focuses on cost of efficiency. With natural gas, we get heat or power. Then it’s gone and we get a bill. With efficiency, it’s an investment that pays off over time. Over it’s lifetime, efficiency costs less than supply – by law. Saving more energy is the answer, not the problem. Does this graphic, courtesy of National Grid, support the “sky is falling because of efficiency” argument? The article could also have pointed out that Grid has a big stake in new gas and transmission infrastructure.
The problem comes when people continue to view energy efficiency as a “cost,” as opposed to a “resource.” Just like fossil fuel generation or nuclear or wind or solar, energy efficiency is a resource that can be identified, priced, purchased and evaluated, just as you would traditional supply. The difference is that it’s a fraction of the cost of those other resources. Just look at the bill explanation graphic that National Grid produced and anyone can clearly see that the energy efficiency “resource” at 1.1 cents/kWh is a better deal for consumers than the other commodity costs of 16.3 cents/kWh. Moreover, as the other commenters have pointed out, energy efficiency continues to accrue benefits to the ratepayer in the form of reduced electricity or gas use long after a therm of gas or kWh of electric purchased as supply has been expended. And, as has also been mentioned, efficiency has been proven to lower both energy usage and peak demand across the wholesale market, meaning we’re paying less for energy than we would have without it.