To the Editor:
First, congratulations on an excellent article by Carol Gannon Salguero in the November 26 issue, “Island electric rates will jump in January.” This is a very big and important issue for the Vineyard, and it deserves this type of reporting.
The reason I am writing you is I think that the rate increase is enormous; there are many important issues that are behind the rate increase which need to be further explored and explained; and the size of the increase is really going to be painful to the average family on the Island.
There are three possible reasons for the magnitude of the increase. They each need to be investigated. The explanations from Cape Light Compact (CLC) are not sufficient, and they should be pressed for a better explanation.
Did CLC make a mistake last winter? They are trying to recover money lost last year. If this is the case, then why did they lose money last year which they need to recover this year? We all know the weather was cold, but did they contract for too little electricity? Did they have a flexible price, or a fixed purchase price from their supplier? Was the quantity of electricity they purchased a fixed amount, or flexible? It seems what happened is as the natural gas (natgas) prices spiked because of the cold weather, they were caught out and forced to pay spot prices for electricity, rather than contract prices, and CLC is now trying to recover that amount. If that was the case, whose fault is that?
If CLC is buying electricity on our behalf, have they done a good job, both last year and this year? Just because the natgas price spikes in a very cold winter, it isn’t necessarily the case that those “spot” costs need to be passed on — it depends on the contract terms which CLC negotiated. Also, please note that the cost of natgas today is the same or lower than it was this time last year. It would also be worth asking CLC if this winter is warm, will the savings be passed on to the customers (us), or is it a one way street?
Is the accounting transparent? Also, what is the reason for CLC’s existence? Are they in the business of securing long-term, inexpensive energy for the Island, or are they promoting one type of energy over another. Why do we buy from CLC instead of NSTAR directly?
Your article is right in pointing out that the lack of pipeline capacity expansion is a big problem for New England. When voters, and their elected officials, reject pipeline permits, and pipeline expansions, the direct result is higher utility bills, which we are seeing today. I’m not sure people understand the connection. The size of this increase is a great opportunity to point this fact out, again, and to explain to readers that by choosing to not expand pipeline capacity, we are paying for it through higher bills. This is a critically important issue. By the way, what is CLC’s position on expanding pipelines?
There is a similar discussion that needs to take place regarding wind power as it relates to electricity bills. You probably know this, but the offshore wind power projects we are about to build in Nantucket Sound and elsewhere are going to produce electricity at a much, much higher cost than the electricity it replaces. This fact is hidden by the misleading explanation that all our electric bills are only going up by a marginal amount, but that is only the case because they are spreading the extra cost of the wind power (I think it’s about three times the cost of conventional power) over the entire Massachusetts rate base. There are also issues of subsidies for alternative energy: how much of this year’s rate increase from CLC is the result of subsidies?
I think there are real issues of stewardship involved here, and that CLC and our elected officials have made, and are making, choices that most people don’t understand. They just see a huge increase in their electric bills. I bet we are now paying the highest electricity bills in the country — you might want to check. The Island is being poorly served by whoever is planning for and purchasing their electricity, and blaming it on a cold winter is a poor explanation. You should follow up your excellent reporting with more.
Jim Oakes
Edgartown