Marty Monarch looks at his electric bill with a frown, bemoaning the rate increase.
In December of 2016, the Plymouth resident was paying 8 cents a kilowatt hour. Now, it’s up to 10 cents. He notes that the electric supplier on his bill has changed from Eversource to Nextera Energy Services in Texas and wants to know what’s going on, because his rate has jumped 25 percent.
It turns out Monarch isn’t the only one confused by the changes. Many residents around the region who happen to be Eversource customers don’t understand what’s going on with their electric bills and wonder why competing suppliers are sending them letters.
Eversource spokesman Mike Durand clarified a number of these issues to help customers better understand their bills.
First, he said, the bill is from Eversource, but Eversource has nothing to do with what Monarch and others who are part of a town’s aggregate agreement are paying to different electricity suppliers.
What’s an aggregate agreement?
Plymouth and many other towns in Massachusetts have signed aggregate agreements with electricity suppliers, other than the ones Eversource uses. In other words, they have a choice to stay with the supplier Eversource uses choose a different supplier.
The important fact to remember here is that Eversource is not a supplier of electricity; Eversource is a delivery company that owns the pipes, the wires and the systems that deliver electricity, Durand said. The company charges for this service and makes its money through these delivery charges. However, Eversource buys electricity and sells it to customers at exactly the same rate the utility pays for it. Eversource makes money on the delivery costs, seen in its bills as line items “distribution charge,” “transition charge,” “transmission charge.” The utility does not make money on the electricity provided.
The kicker is, even if a customer or a town opts to buy electricity from a source other than Eversource’s choice, the customer will still receive a bill from Eversource, hence the confusion. The other supplier will be cited on the bill, with that supplier’s particular rate.
This is just what happened with Monarch.
In Plymouth, Town Meeting opted to adopt electricity aggregation in the spring of 2017 joining with other communities to sign a three-year agreement with Colonial Power Group to garner energy cost savings for residents. (See related story). The rationale behind aggregation is simple: strength and savings in numbers. The savings are in the vicinity of 9 percent.
Colonial Power Group has successfully signed aggregate agreements with Plymouth, Plympton, Pembroke, Kingston, Halifax and Abington among towns in the area and has more than 60 such agreements with towns throughout the state.
Plymouth residents who are part of the aggregate save money on electricity, because the agreement locks the rate at certain lower levels. According to officials, residents had a chance to opt out of the agreement if they chose to do so; a letter was sent to each homeowner apprising them on this.
However, being part of the aggregate agreement is a financial benefit to residents.
While Monarch saw a 25 percent increase in his bill from December 2016 to January 2018, he would actually be paying more if he had decided to opt out of the aggregate agreement and stick with Eversource’s electricity supplier. According to Plymouth’s aggregate agreement, Monarch and others may opt out at any time.
Durand noted that Eversource’s supplier is currently charging 12.8 cents per kilowatt hour – the same charge the utility passes on to customers. By contrast, through its aggregate agreement, Plymouth and other towns in the region secured a price of 10 cents per kilowatt hour. That’s what Monarch and others in the agreement are paying, or more than two cents less
Rates are reviewed and revised every six months, Durand added. That’s why Monarch paid 8 cents per kilowatt hour in December of 2016. The Eversource rate increased, as rates typically do, jumping from 8 cents to 10 cents per kilowatt hour in July through December of 2017, he said.
“We’ve seen an uptick in the price suppliers are charging for electricity,” Durand said. “It does historically. It’s higher than it had been due in large part to the lack of natural gas pipeline capacity in our region.”
Durand explained that most power plants use natural gas as a fuel to make electricity. But during the winter, when most of the available gas is being used for residential and business customers, utilities are forced to use older, less efficient plants or switch to oil instead of burning natural gas. That’s more expensive and causes the price of electricity to jump, and is the reason why electricity rates tend to be higher during the winter.
Meanwhile, since the electricity industry was deregulated in the 1990s, electricity supply companies continue to compete for customers, causing more confusion for customers. So in addition to aggregate agreements, customers have to negotiate their way through individual offers.
CleanChoice is a company that sent mass mailings to a number of residents, asking if they would like to switch to clean energy. All the recipient of the letter had to do was to sign and return a form and the customer’s electricity supply would be generated through solar and other renewable energy sources. People interested in reducing their carbon footprint and protecting the environment may sign on to this plan. However, be aware that, while the energy is clean, in this case it’s more expensive. CleanChoice’s mailing, dating several months ago, notes that the cost to do this is 14 cents per kilowatt hour. That’s 2 cents more than what Eversource’s supplier is charging and 4 cents more than Plymouth’s aggregate agreement.
Complicating matters further is the fact that Eversource’s delivery charges increased, but not as significantly as anticipated, according to Durand. He noted that Eversource filed for a rate increase in 2017 with the Department of Public Utilities. This increase amounted to about $8 a month on the average residential customer’s bill, he added.
“As we worked with the DPU and the attorney general’s office, that proposed increase came down,” Durand said.
Changes to federal tax laws meant a savings to Eversource, however , so the increase was reduced to approximately $2.30 more for the average customer.
For Monarch, that’s a step in the right direction, for now. Durand stressed that electricity rates change every six months.