On Nov. 1, basic service price will more than double
The utility said on Wednesday that the cost of electricity provided under its basic service plan will more than double on November 1, rising from 14.8 cents a kilowatt hour last winter to 33.9 cents this winter, the highest level ever.
The cost of electricity is only one element of a customer’s bill, which also includes delivery and transmission charges. Overall, a typical customer using 600 kilowatt hours a month is expected to see his monthly bill rise from $179 to $293, an increase of 64 percent.
“This is the highest increase that I’ve ever seen,” said Helen Burt, National Grid’s chief customer service officer.
National Grid serves 1.3 million customers in central Massachusetts, parts of western Massachusetts, and the South Shore. The increase affects only those National Grid customers who have the utility procure electricity on their behalf, but the price hike is an indicator of what is coming for nearly all electricity customers in the state.
The price of natural gas rose last winter as production lagged in the wake of COVID. As production in the United States began to scale back up, war broke out in Ukraine in February and energy markets worldwide were turned upside down. Europe, cut off from Russian natural gas, turned to world markets. More US gas went abroad and inflation spiked. The impact in New England is even more pronounced because the region has limited access to natural gas pipelines.
In the past, electricity price spikes have tended to come and go in New England, but analysts say the situation is unlikely to improve until world markets calm down or the region shifts more toward renewable sources of energy, which is going to take years.
“This may persist well beyond one season,” said Dan Dolan, president of the New England Power Generators Association. “It’s hard for me to envision the new development that will untie the constraints.”
Matt Kakley, a spokesman for the regional power grid operator ISO New England, said the flip side of what is happening now occurred in 2020, when prices of natural gas fell. National Grid’s basic service price for the six months starting November 1, 2020 was 12.4 cents a kilowatt hour, the lowest level in the past six years.
“When we tie ourselves to internationally traded fuels, there’s going to be this type of volatility,” Kakley said.
National Grid buys power on behalf of its basic service customers twice a year, in March and September, following a regulatory approved process established more than 20 years ago. But the timing of the procurements, coming shortly after the beginning of the war in Ukraine, led to the record-setting price increases.
“Things have fundamentally changed,” said National Grid’s Burt. “Today, under a sustained, high market price environment, it is challenging to maintain affordable prices. Given that, we think it’s a good time to work with our regulators and other stakeholders to review the process and electricity supply dynamics in the region, with an eye toward reducing price volatility and maintaining a secure, reliable, and resilient energy system for the future.”
Eversource, the electricity distribution company in eastern Massachusetts, is scheduled to release its winter basic service rates later this fall.Both National Grid and Eversource on Wednesday released their prices for delivery of natural gas starting November 1. National Grid said its prices will rise sharply, but less than for electricity because procurements for natural gas are staggered and long-term, so there is less impact from the recent runup in prices. For Boston Gas customers using 115 therms a month, the average monthly bill will be $278, an increase of of $50, or 22 percent, compared to last winter. For Colonial Gas customers using 107 therms a month, the typical bill would be $241, an increase of $47, or 24 percent.