Somerville’s new electricity contract offers some hope

SOMERVILLE THIS WEEK offered some hope to those worried about the high cost of electricity ever since National Grid said its basic service rate would be jumping to a record 33.9 cents per kilowatt hour on November 1.

The city said it signed a contract starting November 1 with Direct Energy that will provide electricity to residents at a much lower price — 14.9 cents a kilowatt hour for basic service, 15.7 cents a kilowatt hour for power with 20 percent more renewable energy, and 18.6 cents a kilowatt hour for all-renewable electricity.

Somerville’s contract will last two years, while National Grid’s rate will remain in place for only six months. A lot can happen over the next two years in energy markets, so locking a price in for that length of time carries some risk. But Somerville’s new rates suggest municipalities and individuals may be able to find some relief for soaring electricity prices by shopping around.

Massachusetts residents have no choice when it comes to selecting their local utility, which delivers electricity to their home. But residents do have a choice about their electricity provider. They can buy power on their own, they can join with their neighbors and buy power as a group through their municipality, or they can let their utility buy power on their behalf.

Somerville residents have all three options. Eversource is the local utility serving Somerville. Under existing rules, it can procure power on behalf of its customers in six-month increments and pass it along at cost. The current Eversource basic service rate is 17.9 cents a kilowatt hour. The company will soon announce what it is charging for the six-month period starting January 1, and the expectation is the price will be somewhat similar to what National Grid is charging.

Somerville started aggregating its residents and purchasing power on their behalf in 2017. Somerville is free to negotiate power supply contracts of any duration, so it chose to lock in rates for the next two years. In announcing the new rate, Somerville acknowledged there are risks.

“Future savings compared to Eversource basic service cannot be guaranteed because future basic service prices change every six months for residential and commercial customers and every three months for industrial customers,” the city said.

Christine Blais, director of Somerville’s office of sustainability and environment, said the city believes a two-year contract is a “conservative choice,” but she noted that residents are free to opt out of the program and find an alternative electricity supplier if rates change dramatically. She said Somerville’s rates have been lower than Eversource’s basic service price for all but six months out of the last five years.

The National Grid basic service rate hike is prompting some soul searching about the way utilities procure basic service power. The system has worked fairly well for the last 20 years, but it’s unclear, particularly when markets are so unstable, whether going out to bid for electricity at a set time and for a fixed period of six months yields the best price. 

Jonathan Goldberg, general counsel for the Department of Public Utilities, said during recent deliberations over the National Grid basic service rate hike that finding electricity suppliers is not easy for utilities given the growth of municipal aggregation and companies catering to individual customers.

“The electric distribution companies have explained that obtaining sufficient competitive bids for basic service is an immediate short-term issue,” he said. 

Nathan Forster, chief of the attorney general’s energy and telecommunications division, said in a DPU filing that the problem is not going away soon. “Experts predict that the results of National Grid’s winter basic service procurement are not an outlier,” he said. “Our region’s continuing over reliance on natural gas to fuel our power plants and world geopolitical forces, particularly the impact on natural gas prices from the war in Ukraine, are resulting in historically high winter electricity costs.”

Goldberg said the DPU is very concerned about the runup in energy prices. “Gasoline, propane, oil, natural gas, and electricity costs have all significantly increased over the last year,” he said. “The department agrees, however, that the increase in electric supply costs is particularly concerning. While natural gas customers are expected to experience about a 20 percent bill increase due to rising natural gas supply costs, the electric supply costs through National Grid’s basic service are expected to increase an average residential customer’s electric bill by over 80 percent from current rates.”

Goldberg said the DPU intends to explore ways to improve basic service procurements. In the meantime, he said, customers can look to their municipality if it aggregates customers or they can seek out companies selling electricity to individuals. He urged caution in signing on with companies selling electricity to individuals.

“Customers should be mindful of the rate, the term of the rate, potential termination costs, and any automatic re-enrollment conditions,” he said. 

BRUCE MOHL

 

FROM COMMONWEALTH

Illusory tax revenues: A report from the left-leaning Massachusetts Budget and Policy Center says nearly half of the $2.9 billion to be returned to taxpayers under the tax cap law is “illusory.” The center said a tax break for wealthy individuals inflated tax revenues in fiscal 2022 well beyond the cap, but a good chunk of the money – $1.4 billion – will be refunded to the beneficiaries of the tax break over the next couple years.

“The governor’s plan to refund this illusory $1.4 billion of ‘excess’ FY 2022 revenue through the [tax cap] process does not change the fact that future fiscal year personal income tax collections will be reduced by some $1.4 billion, as filers claim and apply their outstanding FY 2022 pass-through-entity tax credits. This means there will be $1.4 billion less that is available to address critical needs,” the center’s report says.

– Gov. Charlie Baker and legislative leaders have shown little interest in tweaking the tax cap law, which was initiated by Citizens for Limited Taxation and the Massachusetts High Technology Council and approved by voters in 1986. Read more.

Pedal power: Bluebikes ridership in Boston soared during the Orange Line shutdown and more than 117,000 people redeemed free monthly passes. Read more.

OPINION

Get priorities straight: Bob Hildreth of the Hildreth Institute urges Massachusetts leaders to stop fixating on the elite private universities in the state and focus more on the public institutions that educate most of the state’s residents. Read more.

A roadmap for Boston’s new schools chief: Marinell Rousmaniere, CEO of EdVestors, says Boston’s new school superintendent, Mary Skipper, should leverage existing partnerships and effective practices. Read more

 

FROM AROUND THE WEB

MUNICIPAL MATTERS  

Boston city councilors raise the ante on Mayor Michelle Wu’s proposed pay raises for herself and the 13 councilors, voting to boost their own salaries by $10,000 more than she proposed, to $125,000 per year. (Boston Herald) The move had Herald columnist Joe Battenfeld and the Globe editorial page both remarking on how the recently warring councilors put differences aside to come together on the plan to pad their own pockets. 

HEALTH/HEALTH CARE

Massachusetts will put $15 million toward paying off student loans for substance abuse counselors and others who work with people with addiction. (Salem News)

The Dimock Center in Roxbury receives $1 million in federal funding for its substance use treatment programs. (GBH)

WASHINGTON/NATIONAL/INTERNATIONAL

A Washington Post survey finds that a majority (299) of Republican candidates for the Senate, House, and key statewide seats have denied or questioned the outcome of the 2020 presidential election. 

ELECTIONS

Ballot question committees continue to rake in lots of money for each of the four ballot questions. (Gloucester Daily Times)

Lisa Mair, an unenrolled state Senate candidate from Worcester, seeks to tap into frustration about pandemic-related policies and Democratic overreach. (Telegram & Gazette)

Democratic Rep. Paul Schmid of Westport faces a Republican challenge from research consultant Evan Gendreau. (Standard-Times)

EDUCATION

The Northeastern University School of Law mistakenly sent out acceptance emails to 200 people applying for admission and thousands others who applied in the past. The school blamed “a technical error” for the glitch and sent out follow-up emails explaining the mixup. (Associated Press)

TRANSPORTATION

Slow zones are still continuing on the Orange Line and the T provides no explanation on how long they will remain. (GBH)

Massachusetts gets federal money to expand its network of electric vehicle charging stations. (Salem News)

ENERGY/ENVIRONMENT

ISO New England pays a $500,000 civil penalty to settle a complaint by federal energy regulators related to construction delays at the Salem Footprint power station. (Gloucester Daily Times)

Two wind turbines installed in Falmouth in 2010 and shut down in 2017 because of local opposition are now gone. The last turbine standing was knocked over on Wednesday. (Cape Cod Times)

The National Grid natural gas tank in Dorchester with the Corita Kent rainbow of colors on the outside is getting repainted for the first time since 2015. (Dorchester Reporter)

CRIMINAL JUSTICE/COURTS

Prisoners’ rights advocates fault the Bristol County jail for failing to provide proper observation for a man who committed suicide in jail. (Standard-Times)