Power to the People is a column by Donald M. Circle, Consumer Advocate of New Hampshire. Kreis and his four-person employees represent the interests of customers of private utility companies before the NH-Stadtwerke -ommission and elsewhere.
By DONALD M. KREIS, Macht dem Volk
You are about to experience what is known as a “rate shock”.
Translation: Your electricity and gas bills will go up significantly and you won’t be happy about them.
Attachment A is Unitil’s filing with the Public Utilities Commission (PUC) on Friday October 1st. The company, which serves electricity customers on the coast and in the greater Concord area, will adjust its standard tariff for energy services on December 1st.
In the event that you need a little refresher, the “standard energy service” is intended for people who have not exercised their right to choose an unregulated electricity supplier. The installment payers earned that right by paying hundreds of millions of dollars in stranded cost payments to electricity suppliers enforced by the state’s Electric Industry Restructuring Act of 1996.
It was a fabulous deal for New Hampshire’s commercial and industrial electricity customers, most of whom have migrated to what are known as competitive electricity providers. These customers generally pay less for electricity than they would have if they were forced to stay with their utility.
Private customers have not seen such advantages. The non-utility electricity companies have generally either not cared about the residential sector, which they believe is too expensive, or have exploited the unwary by offering them cheap “teaser” tariffs and hoping they don’t notice if the tariffs rise later to a higher level than what the supplier offers through its standard energy service.
All three of our investor-owned electricity suppliers – Eversource, Liberty and Unitil – receive their standard energy service the same way. Every six months they put out a tender and accept power supply offers from electrical wholesalers. They declare a winner, usually by choosing the lowest bidder. Then they add the cost of complying with the state’s Renewable Portfolio Standard (RPS) and adjust their standard tariffs for energy services accordingly. With the permission of the PUC, of course.
Well, as for Unitil, the tenders for the coming winter have been received and the results are not nice.
Unitil chose NextEra Energy Marketing – the wholesale marketing arm of the Florida-based power company, which owns the Seabrook nuclear power plant, among others – as the winner. And the resulting electricity wholesale costs will increase by 172 percent compared to the current level.
That means trouble in retail. The price of Unitil’s standard energy service for private customers has more than doubled. In real terms, we spoke of a new price of 17.5 cents per kilowatt hour compared to the current price of just under 7.1 cents.
If you’re an electrical industry insider, point out right away that the comparison is unfair. In winter, the cost of generating electricity always increases with the start of the heating season, and the energy demand also increases.
Okay, let’s compare Unitil’s proposed standard price for energy services for this winter to what was approved a year ago. Last winter, the price for private customers was 9.3 cents. So on an apple-to-apple basis, the cost of standard energy service in the Unitil area does not double. It is only almost Doubling.
When taking on the interest rate shock, remember that if you’re a Unitil retail customer, yours total invoice won’t double. That’s because you also pay a fixed monthly fee of $ 16.22 along with charges per kilowatt-hour for distribution, transmission, and system services (i.e., energy efficiency and low-income support). Unitil also plans to increase most of these fees, but the interest rate case they filed with the PUC earlier this year to increase these fees is still pending.
However, the fact that all the components of your electric bill generally don’t increase at the same time shouldn’t obscure the grim reality of a doubling in the price of standard energy services. How could that happen?
Here is the official statement from the written testimony of Jeffrey Pentz, a senior energy analyst at Unitil. “The price increase compared to the previous periods [is] directly attributable to significant increases in forward prices for natural gas, which have a direct impact on power futures. “
Translation: In New England, most of our electricity is generated by burning natural gas. For example, on the Friday afternoon that Unitil made its submission, 56 percent of New England electricity was generated by natural gas generators. So when the price of natural gas goes up, so do our electricity prices.
The references in the Pentz statement to “forward natural gas prices” and “power futures” relate to the fact that NextEra Energy Marketing and its competitors have to base their bids on their fixed price wholesale offers for the supply of our utilities’ private customers Forecasts of what wholesale prices will look like in the coming winter. These projections are ugly.
A written testimony recently filed with the PUC by Deborah Gilbertson, Senior Energy Procurement Manager at Liberty Utilities, provides a slightly more detailed look at what happens to wholesale natural gas.
“NYMEX natural gas futures continue to trade at their highest summer level in seven years,” Gilbertson told the PUC on September 1, referring to a much-quoted benchmark price. “Compared to the previous year, for example, NYMEX is currently trading around 30 percent higher on average than at the time of the previous year.”
But why? According to Gilbertson, “this is largely related to concerns about national inventory levels for the coming winter. Hot summer temperatures across the country have prevented consistent, larger injections from the five-year average, with the last year being particularly hard hit. “
Injections? She is not talking about COVID-19 vaccines, but about natural gas, which is introduced into storage facilities in the summer months with low demand.
“Also,” continued Gilbertson, “the demand for US LNG exports to international markets is robust, reducing the availability of supplies to US markets.” LNG is liquefied natural gas, the form in which the material is shipped to distant locations Continents is transported. As a major natural gas producer, the United States is fueling the world these days.
“The consensus is that higher domestic prices are likely to continue until storage across the country returns to normal levels and LNG exports level off,” Gilbertson concluded. Final translation: After a long period of historically low wholesale prices for natural gas, our dependence on this energy source is finally catching up with us.
Oh, and in case you’re wondering, the reason Gilbertson was saying is that Liberty is aiming for an analogous rate hike. If you are a natural gas customer, the applicable fee is referred to as the “gas cost”. Both Liberty and Unitil – the state’s natural gas suppliers – are aiming to significantly increase their gas bills for the winter.
Are you an Eversource customer and feeling complacent after reading the above? Don’t feel complacent. Eversource is submitting its next submission to the PUC for the next Standard Energy Service effective February 1st. The same goes for Granite State Electric, Liberty’s electrical subsidiary. Will there be whopping increases in standard energy service fees for these companies? You can count on.
What can we do about these gloomy developments? That is the subject of a future column, but – spoiler alert – there are no easy answers and those peddling such answers are wrong. In the meantime, I am sorry to be the bearer of bad news.