Summer Brings A Break From High Electricity Rates

May 13, 2015

Electricity prices should fall in western Massachusetts this summer.  The region’s two major investor-owned electric utility companies have filed plans with the state’s regulatory board to cut rates. Also, there should be no concerns about power shortages this summer.

Eversource, formerly known as Western Massachusetts Electric Company, announced this week a plan to cut rates by more than 31 percent. The company said the average customer, using 500 kilowatt-hours a month, can expect to save $22 a month.

Earlier this year, National Grid said it proposed to cut electric rates by 26 percent, which the company said would save the 500 kilowatt-hours per month customer $32 a month. Both company rate plans need approval from the Massachusetts Department of Public Utilities to take effect July 1st. 

Although the electricity prices would be slightly higher this summer than last, the proposed rate cuts come as welcome relief after a winter where Massachusetts recorded some of the highest energy costs in the country.  High electricity prices threaten the state’s economy according to UMass Amherst economist Robert Nakosteen.

"There have been some businesses that are quite electric intensive that have already left the state. They can't take either the high electricity cost or the variability -- the sharp spikes in electricity costs," he said.

Utility companies blamed the high winter electric rates on the cost for the natural gas used to produce electricity.  Natural gas prices are coming down now as less is needed for home heating.  Natural gas now accounts for about half the electricity produced in New England, compared with 15 percent in 2000. During the same time period, natural gas surpassed oil as the dominant fuel for home heating.

" We need to solve this problem," said Nakosteen.  " It is a problem that has a solution, but it has to do with natural gas infrastructure and of course nobody wants a pipeline in their backyard, so we have a long way to go to solve this problem."

Massachusetts Gov. Charlie Baker has pledged to tackle the problem of the state’s high electricity costs.   Lt. Gov. Karyn Polito said the solution needs to be found in concert with the other New England states.

" We need a sound approach to how we will expand energy sources here in our Commonwealth working with our regional partners," said Polito.

In addition to increasing natural gas pipeline capacity, the New England governors have spoken about importing more hydropower from Canada and tapping into large-scale wind farms under development in northern New England.  There has been no agreement on how to pay for the new transmission lines that would be need to bring the power south.

     Massachusetts residents and small business owners will no longer be penalized when they switch from a utility company’s basic service to a competing suppler of electricity.  The DPU recently eliminated an obscure 15-year-old rule that permitted utility companies to retroactively recalculate rates for customers that switch suppliers.

State Rep. Jose Tosado of Springfield and other legislators successfully lobbied the DPU to repeal the regulation.

" You think you are doing the right thing to safeguard your personal finances by switching to a lower-cost provider you get hit by this retroactive recalculation. At the end of the day it does not pass the smell test," said Tosado.

  State Senate President Stan Rosenberg of Amherst has called on the DPU to consider ordering electric suppliers to issue refunds to customers who were hit by higher bills as a result of the retroactive rate recalculations.

ISO New England, which manages the region’s power grid, said there would be enough power available this summer to meet the region’s demands.  The positive forecast comes despite the closing of two power plants.

Vermont Yankee operated at near full capacity last summer. Its nuclear reactor was shut down last December.   Mount Tom Station, a coal-burning plant in Holyoke, also shut down in December.  It had been used sporadically in recent years to meet demand spikes in the summer.