NATIONAL GRID said its price for basic service will plummet starting May 1 but still remain above levels from a year ago.
Basic service is electricity National Grid buys on behalf of customers who choose not to select their own supplier. National Grid procures the electricity through a competitive bidding process and collects no markup from customers.
Last fall, the utility shocked customers when it said its basic service price for the winter would rise to 33.9 cents a kilowatt hour, its highest level ever. The company blamed the high prices on very tight markets for natural gas – the chief fuel used to produce electricity in New England– due to market disruptions prompted by the war in Ukraine.
Electricity prices always fall in the summer months when demand for natural gas lessens. National Grid said on Thursday that its summer basic service price will be 14.12 cents per kilowatt hour, a huge drop from the winter price but still 2.6 cents per kilowatt hour higher than last summer.
The cost of electricity is just one element of a customer’s bill, which also includes charges for transmission and delivery. With the new basic service rates, a customer using 600 kilowatt hours a month will see their bill fall from $297.22 to $181.83, a decline of 39 percent.
National Grid serves 1.3 million customers in central Massachusetts, parts of western Massachusetts, and the South Shore. Eversource, which serves eastern Massachusetts, will announce its summer rates later.
Under state regulations, utilities are allowed to procure their basic service power at set times and only for six-month periods. That limits their ability to find the best price.
Many customers this past winter migrated to other suppliers, including municipalities that buy electricity on behalf of their residents. The municipal aggregators have more flexibility in timing their procurements and can negotiate better deals.
Boston, through its community choice electricity program, has locked in a price of 10.9 cents a kilowatt hour from February through December. The program charges higher prices for electricity with more renewable content – 13.9 cents a kilowatt hour for 100 percent renewable electricity.
The dramatic fluctuation in electricity prices has prompted an intense policy debate about the region’s continued dependence on electricity produced using natural gas. While that dependence has yielded record low prices at times when there are abundant supplies of natural gas, the flip side came this past winter when supplies tightened.
Clean energy advocates have pointed to the runup in natural gas prices in pushing for more rapid development of home-grown renewables that can reduce the region’s dependence on the volatile fossil fuel market.
Renewables, however, have encountered their own problems. Offshore wind developers, for example, are facing financing challenges amid rising interest rates and inflation. Avangrid, a major wind farm developer in New England, is seeking to terminate its existing power purchase agreements with Massachusetts utilities because it says the terms are no longer adequate to obtain financing for the project.