Can you afford not to shop?
National Grid default service customers should start comparing best electricity providers right now!
The last two weeks have seen investor-owned utility National Grid filing for default service rate hikes in all of its service territories. Massachusetts, New York, and Rhode Island have all been hit with rate-hike proposals. The default service charge is the price National Grid pays for the electricity and that this is passed straight through to its consumers without mark up or profit.
- In Massachusetts, National Grid has filled with the Department of Public Utilities to raise default service rates by 34% starting November 1.
- In New York, National Grid wants to raise $330.7 million annually by boosting electricity rates by 17.5% and 20.5% for natural gas. Most upstate New York electricity rates would pay an extra $200 a year; small businesses even more.
- Most painful of all, Rhode Island faces a 53% hike in the standard service rate, with prices going rising from 6.3¢/kWh to 9.5¢.
The cause? One major cost affecting all investor-owned utilities has been in transmission/distribution line modernization. EIA data show that transmission costs have increased from 2.2¢/kWh in 2006 to 3.2¢/kWh in 2016. To make these costly projects more tempting to power companies, transmission projects have guaranteed high rates of return through FERC-backed incentive programs that permit costs to be recouped from customer bills.
Like other New York local utility companies, National Grid has been busy enhancing its transmission and distribution. It announced in its 2014 Electric Transmission and Distribution System Fifteen-Year Plan that it intended to spend at least $8.57 billion during the period, which included an estimated $512 million in 2017 for transmission and distribution. National Grid is currently working on transmission and reliability projects in Massachusetts, New York, and Rhode Island as well as the proposed Northeast Renewable Link that will deliver up to 600 MW of New York renewable wind and solar to the New England energy grid.
Yet, the most immediate blame goes to high wholesale prices and high prices in the regional energy markets (some which have been caused by transmission congestion). EIA data shows that natural gas prices rising this year and is currently 37% higher over the first half of 2016. High summer temperatures throughout the U.S. has helped keep demand for power burn high. In it’s September STEO, EIA expects natural gas prices to increase this coming winter, which will in turn likely drive electricity prices higher into the spring. New York relies on natural gas for about one third of its electricity though eastern region of the state depends on it the most.
Fortunately, savvy consumers in upstate New York and Long Island know how to protect themselves from rising rates. Because New York’s Energy Service Companies (ESCOs) purchase electricity from spot markets or via fixed contracts with generators, they get better deals on electricity supply. And because they compete with each other for customers, they try to offer the cheapest electricity rate, and their best incentives. So whether you live in Albany, Syracuse, Rochester, or Buffalo, shopping for your electricity provider can help you find the best electricity plan that fits your lifestyle and your budget.