Brace yourselves, Islanders. Electricity rates are slated to soar 29 percent beginning January 1 for households and small businesses, NSTAR announced. The increase was approved by the Massachusetts Department of Public Utilities on November 14. For the average household that consumes 500 kilowatt-hours/month that means an increase of roughly $30 a month, at least until July 1, 2015, when rates are adjusted again.
|Cape Light Compact Pricing||Residential||Commercial||Industrial|
|November 2014 Prices||8.892 cents/kWh||8.892 cents/kWh||7.752 cents/kWh|
|December 2014 — July 2015 meter reads||15.371 cents/kWh||14.300 cents/kWh||20.070 cents/kWh|
The rate hike actually originates with Cape Light Compact (CLC), the municipal buying group which contracts with power suppliers and the price it must pay power generators who have seen natural gas prices soar. NSTAR distributes power to customers. Whatever CLC charges for electricity is passed on directly to the customer, with no profit for NSTAR.
Cape Light Compact consists of 21 towns and two counties on Cape Cod and Martha’s Vineyard. The Compact said its mission is “to serve our 200,000 customers through the delivery of proven energy efficiency programs, effective consumer advocacy, competitive electricity supply and green power options.”
CLC has awarded a two-year contract to ConEdison Solutions to supply residential power to NSTAR. Starting with December meter reads, the Compact’s price will be 15.371 cents per kilowatt hour for residential customers, according to CLC, versus 8.892/KWh last year.
Mike Durand, NSTAR’s spokesman, compared the relationship of CLC to NSTAR with that of Amazon to Fedex. “If you buy an item on Amazon, you pay Fedex a shipping charge to receive the item. If Amazon raises the price on that item, Fedex doesn’t raise the shipping charge. We’re the Fedex in the rate increase.”
Two harsh winters, particularly that of 2013-14, explain the 29 percent rate spike. “It’s partly retroactive cost recovery for CLC and partly anticipation that prices this year could be as bad as last year,” said Stephan Wollenberg, CLC’s power supply planner.
On the edge
Vineyarders, along with other New England consumers, pay some of the highest electricity rates in the country. Add to that a seasonal economy with a labor force that is largely year-round, and the effect of the price rise is exaggerated.
“Thirty dollars doesn’t sound like much unless you are already dealing with the Vineyard’s high costs and seasonal job fluctuation,” said David Vigneault, Executive Director of the Dukes County Housing Authority (DCHA). “It’s just loading more straw onto the camel’s back.”
Betty Burton, President of the Vineyard Committee on Hunger and Coordinator of Serving Hands and the Family-to-Family food programs, was shocked to learn of the price spike. “So many of our customers are already living on the edge, I don’t know what they will do,” she said.
A year-round wage buffers the jolt, but does not eliminate the need to rethink a budget. It may mean fewer movies or skipping that longed-for dinner out.
Cynthia Hill of West Tisbury said it will likely mean that “I reduce the gigabytes on my Internet hot spot, and Salty and I will probably select a less expensive package from our satellite TV provider.”
With any solution to New England’s energy crisis at least several years away, the only immediate way to mitigate the impact is with energy savings. Both CLC and NSTAR are urging customers to avail themselves of their free energy audits that will show consumers how to save energy and lower costs.
“Energy efficiency is the single most important way to offset energy costs,” said CLC’s Stephan Wollenberg, making the pitch for the group’s energy assessments, which include giveaways such as LED and compact fluorescent bulbs, caulking against drafts, and rebates ranging from 75 percent to 100 percent for insulation.
Gas fuels hikes
The roots of New England’s energy crisis are in the region’s addiction to natural gas, which became cheap as U.S. production ramped up following the discovery of huge natural gas deposits in Pennsylvania, exploited through the controversial process known as hydraulic fracturing or “fracking.” As cheap gas flowed into the domestic market, consumers moved quickly to switch their heating and air cooling systems from dirtier oil to cleaner, cheaper gas. So did power generating companies.
Demand for natural gas soared, but the pipeline capacity for getting it here did not. Today, almost 50 percent of the region’s electricity is produced by natural gas, up from only 15 percent in 2000. Pipeline capacity has not changed in 20 years. The bottleneck drove up gas prices. In the queue to buy natural gas, consumers take precedence over generating plants. If there is not enough gas to meet peak heating demand — as happened when the polar vortex hovered over New England last year — power companies are forced to produce electricity using more costly fuels, usually stored oil.
No answer in sight
How Massachusetts and New England solve the energy crisis is now the big question. More pipeline or go alternative?
Three projects for new or expanded natural gas pipelines are under discussion, but there is also strong opposition to pipelines from conservation and alternative energy advocates, to say nothing of people living along the proposed pipeline routes.
Governor Deval Patrick rejected, after initially supporting, the Northeast Direct pipeline proposed by Kinder Morgan to bring an additional 800 million to 2.2 billion cubic feet of natural gas through rural northwestern Massachusetts toward the Boston hub.
“It wasn’t just the pipeline itself, but the idea proposed by the Kinder Morgan to have the public pay for it via a tariff,” said Peter Shattuck, Director of Market Initiatives for the Acadia Center, a research and advocacy organization for energy conservation, alternative energy sources and climate change. “Instead, the Governor formed a commission to do an in-depth study of diverse energy sources.”
Of the three proposed pipelines, only the Algonquin Incremental Market, known as AIM, has been permitted. Scheduled to come online during 2015, it will add 350 million cubic feet of capacity to an existing pipeline coming from New York through Connecticut to lower Massachusetts.
“It will create some relief,” Mr. Shattuck told The Times, “but how much natural gas do we really need?
Before investing, we need to continue reducing demand and look at other sources of energy such as wind and hydro, Mr. Shattuck said. Offshore wind projects are maturing due to advances in Europe, and hydro power from Quebec or the Canadian Maritimes offers another abundant, renewable resource. Some of these projects could be online as quickly as any of the proposed pipeline expansions, he added.
The third project is Access Northeast, proposed by Northeast Utilities (NSTAR’s parent company) and Spectra Energy. It would expand existing pipeline capacity in increments of 200 million cubic feet up to two billion cubic feet. Its target service date is November 2018. Mike Durand says the project has not even reached the Federal Energy Regulatory Commission for review yet, but “customers won’t pay for it.”
The spotlight is now on Governor-elect Charlie Baker. During his campaign Mr. Baker opposed the Northeast Direct pipeline and supported Hydro Quebec as a renewable energy source. He also emphasized energy efficiency and proposed a sales tax waiver for energy-efficient appliances and upgrades. Another of his ideas was a LED lighting rebate for businesses and homeowners to encourage the transition from traditional lighting to LED lighting.
“No one knows precisely what the energy system of the future will look like…but it will look quite different from the pipeline- and power-plant heavy system we have now,” Mr. Shattuck and co-author Jamie Howland write in a recent issue of Commonwealth magazine. Although unsure how Governor-elect Baker will proceed with the Patrick study commission, Mr. Shattuck is nonetheless optimistic because “we were hearing good things in the campaign.”
Mr. Shattuck added, “We need to kick this [natural gas] habit rather than pursuing another pipeline fix that would further tie us to the price volatility of a single fuel and make it harder to go clean in the future.”
Matt Beaton, newly appointed by Mr. Baker to be energy secretary, told The Times the new administration will seek a “balanced approach” that includes natural gas, wind, and solar. Asked how Mr. Baker’s administration will work with the energy study commission created by Governor Patrick, he said, “We need to listen to everybody so we can form our own perspective.”
Correction: An earlier version of this story incorrectly reported that NSTAR purchases power from the Cape Light Compact. NStar does not purchase power. NSTAR bills, collects and passes on payments from customers to the Compact, but otherwise is uninvolved in power supply purchases. The contract with ConEdison is for two years, not three years as originally reported.