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New England's Winter Electricity Supply Prices Remain Volatile

Tidal Energy
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National Grid Urges Mass. Customers to Take Control, Use Energy Efficiency and Billing Tools

September 15, 2015 - WALTHAM, Mass. – National Grid recently contracted for electricity supply from suppliers on behalf of its Massachusetts customers for the upcoming winter season. The company today filed the corresponding rates, at no markup, with the Massachusetts Department of Public Utilities (DPU) to adjust electric supply prices for the winter. Due to continued gas pipeline constraints, the electric supply prices remain volatile and relatively high, though not as high as last winter.

If approved, starting in November, the electric supply price for Massachusetts residential electric customers will be 13.1 cents per kilowatt hour. As a result of these market prices, a typical residential customer would see an electric bill that is 21 percent higher than their current bill and 9 percent lower than last winter’s bill (when accounting for additional bill adjustments made throughout the year). The typical residential customer’s monthly bill starting November 1 will be $110.18, compared with a current bill of $90.82 or November 2014 bill of $121.20.

“National Grid remains concerned about volatile and unpredictable electricity supply prices our customers are subject to,” said Marcy Reed, president of National Grid in Massachusetts. “We urge Massachusetts residents to take full advantage of energy efficiency tips and other solutions such as payment programs that can help stabilize their bills.”

National Grid continues to advocate for a balanced portfolio of energy resources, including large-scale renewables, increased natural gas capacity and enhanced energy efficiency programs, as the key to securing New England’s long-term energy future and providing our residential and business customers with the stability they need.

The new electric supply prices will be in effect from November through April versus the current prices in place from May through October. The section of the electric bill where customers will see the difference is called Supply Services. This section of the bill represents the cost of the electricity the company purchases on behalf of customers and passes on without a markup. This winter’s price represents a 41 percent increase from the current residential electric supply price and a 19 percent decrease from last winter’s price.

National Grid does not generate electricity and plays no role in determining market prices; the company delivers electricity to the homes and businesses of customers. With about half of New England’s electricity generation now fueled by natural gas, electric supply prices have risen again this winter because of continued constraints on the natural gas pipelines serving the region, which decrease natural gas availability at times of peak demand, causing some generators to buy gas on the spot market at higher prices, switch over to alternate fuels or not run at all.

Electric Distribution Rates

Separate from the Supply Service section of the electric bill is the Delivery Services section of the bill. The distribution charge within the Delivery Services section represents what National Grid, with approval from the DPU, charges its customers for the investment in and the operation and maintenance of the system that delivers electricity to their communities, businesses and homes each day.

National Grid has not updated its distribution rates since 2010 and these rates are currently based on the 2008 cost of doing business. As with any business, costs have risen significantly in that time. For example, the amount National Grid pays in property taxes in Massachusetts doubled from 2008 to 2014.

National Grid is preparing a proposal to update its electric distribution rates for submission to the DPU later this year. The proposal will undergo a thorough review process; any changes to distribution rates would likely not take effect until later 2016.