By: Stephen Singer |
Connecticut has approved double-digit increases in electric rates next year in response to rising demand for natural gas that fuels power generators in winter.
The Public Utilities Regulatory Authority announced Tuesday that following energy auctions, it verified generation rates submitted by Eversource that are set to rise to 10.1 cents per kilowatt-hour, up from 8.5 cents, an 18.8 percent increase.
A residential customer who uses an average of 700 kilowatt-hours of electricity each month will pay about $11.29 a month more on the supply portion of the bill, Eversource said. The actual amount depends on how much energy is used, weather conditions and other factors.
PURA also approved action by United Illuminating to raise its residential generation rate to 11.2 cents per kilowatt-hour, from about 9.1 cents, an increase of about 24 percent.
UI said natural gas availability in the winter “can be extremely constrained due to high demand.” It explains why customers typically see rates that are higher in the winter and lower in the summer, the utility said.
Dan Dolan, president of the New England Power Generators Association, said swings between summer and winter electricity prices have become regular.
Price increases between 15 percent and 20 percent are “fairly common,” with winter the primary season for costlier electricity, Dolan said.
Although more electricity is used in summer to power air conditioners, power is costlier in winter because of natural gas that runs generators, he said.
As of July 1, Eversource’s standard residential generation rate dropped to 8.5 cents per kilowatt-hour, from 9.1 cents, in an auction approved by PURA. The 8.5-cent charge will remain in effect until Dec. 31.
The generation rate accounts for about 40 percent of the monthly electric bill for most residential customers, PURA said. Transmission and other costs make up the remainder.
The generation service charge is adjusted twice a year, on Jan. 1 and July 1, and is a pass-through cost that delivers no profit to utilities.
Higher electricity rates are shared by producers that are paid more for drilling more natural gas and generators that bid a higher price for the increased amount of gas. “Along the way, others take their cut off it,” said Jeff Gaudiosi, power procurement manager at PURA.
More than half of New England’s electricity is produced using natural gas that’s piped in from Pennsylvania, upstate New York and other areas west of New England, Eversource said.
Constraints on natural gas supply, or bottlenecks that occur as pipelines struggle to deliver rising levels of gas, drive up the cost of energy in winter, the utility said.
“Until new energy infrastructure is in place to relieve that constraint and to lessen the region’s reliance on gas, all of New England should expect to experience higher energy prices compared to other areas of the country,” Eversource said.
Environmental advocates disagree.
Greg Cunningham, vice president and director of the clean energy and climate change program of the Conservation Law Foundation, an advocacy group, called it “curious” that Eversource is encouraging more investment in natural gas, though it’s volatile in price.
He also said the utility, rather than paying for the pipeline, is trying to shift the cost to ratepayers.