Flip a light switch; pay more. Cape Light Compact deal calls for big rate hike

By Janet Hefler - December 8, 2005

Vineyard residents can expect to see their electric bills jump about 36 percent next month, under new rates set by Cape Light Compact (CLC) last week.

A new 14-month contract was concluded recently by CLC with ConEdison, just as the previous contract was about to expire. According to Margaret Downey, CLC administrator, ConEdison Solutions offered the lowest price of the three companies with which CLC negotiated.

The contract ensures that prices cannot go higher in the next 14 months, Ms. Downey said, but if rates drop, the compact may seek to negotiate a "blend" of lower energy prices with extended contract prices.

A significant portion of electricity in the Northeast is generated by natural gas, and the disruption caused by Hurricane Katrina in the oil and natural gas supply drove fuel prices up, she explained. "This truly reflects what the electricity price market is doing," Ms. Downey said.

The price per kilowatt hour will rise from 7.132 cents to 12.92 cents, an increase of 81 percent, on January bills, based on December meter readings. However, this does not mean total electric bills will rise that steeply.

Residents can figure how much more they will pay by looking on page one of their electric bill. Under the heading "supplier activity detail," it lists the energy charge per kilowatt-hour multiplied by the number of kilowatt-hours of electricity used for the month.

Based on an average family of four using 500 kilowatt-hours of electricity per month, for example, the new energy charge would total $64.60, versus $35.66 under the old rate.

The electric bill also contains charges for delivery services, about $45 based on the same usage, which will not change. The total bill based on using 500 kilowatt hours would rise from about $80 a month to $109, an increase of 36 percent.

When the electrical industry was deregulated, power companies had to choose whether to be in the distribution or supply business. The compact is a municipal buying group of 21 Cape and Island towns representing more than 183,000 electric customers, formed to negotiate the best electric rate in the deregulated market.

All consumers with residential accounts are part of CLC and automatically receive their power supply from ConEdison Solutions. NStar provides the delivery of power, maintains the wires and poles, reads meters, sends bills, and restores electricity during outages.

The compact's new residential supply rate now is higher than NStar Electric and National Grid rates, electric companies that provide power to Nantucket and other Massachusetts areas.

Although NStar customers will pay 11.2 cents per kilowatt-hour from January to June 2006, the rate is only set for six months. "If the market is up, they will be dealing with some increases, as well," said Ms. Downey. "Consumers who have stayed with us have saved money, and we think we are going to be in that position again."

Residential and commercial customers can opt out of the compact at no fee and pay NStar's basic service rate by calling 1-800-381-9192. However, Ms. Downey said if they want to rejoin the compact later, they may not be able to get back in at the contract price, because the supply is based on a customer base of 183,000.

One way compact members can get a temporary respite from the new electricity rates is by enrolling in the Cape Light Compact Green program by December 31, 2005. The green program provides electricity from renewable energy sources.

By enrolling in the program, members can lock in a rate of 8.9 cents per kilowatt-hour from January 1 to March 31, 2006. Before the end of the three months, they will be notified when a new rate is set and decide whether to reenroll.

"Cape Light Compact Green will be the lowest rate for the supply portion in the state of Massachusetts," said Ms. Downey. In addition, the Massachusetts Technology Collaborative has offered CLC a bonus grant fund for residential customers who sign up for it that will pay for solar panels in their hometown schools.

The green program is limited to three percent of the occupied households in each town, and once the limit is reached, no additional customers will be enrolled until April 2006. Those interested can enroll on line at the compact's web site (click on "solarize our schools campaign" on the home page) or by calling 1-800-381-9192.

As of Wednesday, the green program had openings for 4 households in Aquinnah, 26 in Oak Bluffs, 23 in Tisbury, and 7 in West Tisbury. Chilmark and Edgartown have reached their three percent limit.