National Grid customers will see their electric bills jump nearly 50 percent from October to November, according to the company.
"This is quite a spike," said John Howat, senior energy analyst for the National Consumer Law Center, who said the upcoming cost per kilowatt hour is a record high. He told the News Service, "This is a dynamic that's occurring in the wholesale power market."
This winter's electric rates, which kick in Saturday, Nov. 1, will be 37 percent higher than last winter's rates and 49 percent higher than current rates, according to National Grid spokesman Jake Navarro. Navarro said rate hikes were caused by jumps in the cost of electricity, which the company purchases in a commodity market and passes along at-cost to customers, who also pay a transmission fee.
EDITOR'S NOTE: Cape Wind Communications Director Mark Rodger offered the following statement:
Electric rates are going up because New England is at the end of the fossil fuel pipeline – demand for natural gas surges in the winter while supply is fixed to limited pipeline capacity. But we are at the front of the offshore wind pipeline and winter is our windiest season, recall how the meteorologists talk about the ‘wind chill effect’ on the coldest winter days. Cape Wind will reduce prices in the electricity and natural gas markets when it comes online by producing power when it is most needed to help offset demand for natural gas supplied electricity when it is at its most expensive.
For all the hyperbole and exaggeration over the years by project opponents of Cape Wind raising electric bills, the reality was always that the Massachusetts Department of Public Utilities determined Cape Wind’s electric bill impact for Massachusetts electric consumers would be in the 1% to 2% range. Yet it is important to realize even those modest estimates were at a time when baseline electric market prices were much lower than they are about to become. Including the value of the Renewable Energy Credits from Cape Wind, now trading at 6 cents per kilowatt, Cape Wind’s power may not be any more expensive, and the project will help ease the price spikes of the spot markets for both electricity and natural gas in New England.
Cape Wind also avoids the external costs of burning fossil fuel costs that we ultimately pay for in the form of negative impacts on our health, environment , national security and climate.
Cape Cod rates will skyrocket starting Jan. 1
NSTAR, which serves portions of Metro Boston and Cape Cod, and Western Massachusetts Electric Company, which serves the western part of the state, are expected to file their rates in mid-November for a period beginning Jan. 1.
Officials have predicted higher utility costs this winter. The pipeline supply of natural gas to the area is unable to meet demand during particularly cold periods, when furnaces are burning the fuel to heat homes. Natural gas is generally the cheapest fuel in warmer weather, but when residential demands gobble up most of the supply in the winter the prices spike. In recent winters, power plants that use natural gas have at times been unable to make good on commitments to produce power when needed because they are unable to access gas, according to grid-operator ISO New England.
"It's going to be a very expensive winter," Secretary of Environment and Energy Affairs Maeve Vallely Bartlett predicted in August.
The grid has initiated a program encouraging plants to keep supplies of oil on hand during the winter, and Bartlett said natural gas plants could bring in liquefied natural gas, a more expensive fuel that can be delivered by ship when the region's pipelines are tapped.
The Department of Public Utilities approved the rates on Tuesday and the agency does not regulate the portion of the bill that is determined by commodity prices for electricity, according to spokeswoman Krista Selmi.
Average bills with increase from $88 last winter to $121 this winter
According to National Grid, the monthly bills for a typical customer using 500 kilowatts of power will increase by about $33, from $88 last winter to $121 this winter.
"We're very concerned about what it means for our customers," Navarro told the News Service, noting that the utility provides payment plans for customers and discount rates available for geography and income.
Howat said the roughly 10 percent of customers who use electrical heat - as opposed to gas, oil or other methods - will be hit harder by the increase, and warned that door-to-door salesmen will likely begin offering rates that appear to be discounts at first and variable rates.
"I think it's a sure bet that some of these competitive suppliers are going to hire extra sales people and try to draw people into deals that will end up costing them more," Howat said. He said federal assistance for heating is expected to drop 10 percent this year, creating a larger need for state funding, and encouraged people in need of help to contact local community action agency for subsidies.
Electricity prices experienced a comparable large spike about a decade ago after price-caps initiated as part of electricity deregulation were phased out, according to Howat.
"We're at the mercy of that market," Howat said.
We're not at the end of the wind energy pipeline
Cape Wind could ease stress on the energy infrastructure. Cape Cod Today published an Op Ed last April about the prior winter that expanded upon these winter market conditions, see here.