Many Martha’s Vineyard residents experienced sticker shock when they opened their most recent electric bill this month. In December, the cost of electricity for residential customers, measured as the price per kilowatt-hour (kWh), jumped from 8.892 to 15.371 per kWh. That is a whopping 73 percent increase.
For Islanders who rely on electricity to heat their homes, the hike is a budget buster. For example, one Vineyard Haven family that heats with propane saw their electric bill increase from $74.57 to $136.58. A family that relies on electricity for heat saw their bill jump from $327 to $657. Even accounting for a son home from college over the holidays, it was a shock, said the dad.
According to representatives of the Cape Light Compact, a municipal power-buying group made of Cape and Island towns that negotiates for the best price for its residential and commercial customers, the cost of natural gas for the New England region’s electric generating plants is driving the electric price.
Natural gas is now used to generate 56 percent of New England’s power. As the reliance on natural gas has grown, the pipe-delivery infrastructure has not, and In the winter months, when demand for natural gas to heat homes is at its highest, the price rises. This winter’s rates are the highest seen, and analysts say the factors driving price spikes are likely to continue.
In its waning minutes last week, the Patrick administration released a study that provides little reason to think that winter electricity pricing will drop or even remain stable.
According to a report by Bruce Mohl in CommonWealth magazine, the study by Synapse Energy Economics of Cambridge said the state is likely to continue experiencing sharp spikes in natural gas prices during the winter months for the next four years, because of insufficient pipeline capacity coming into the region. Peak demand for power will be met by other fuels, primarily oil, according to the Synapse report.
In his inaugural address, Gov. Charlie Baker noted that families and businesses are “being hit with unprecedented increases in their energy and electric bills, at exactly the same time energy prices across the rest of the country are falling.”
Massachusetts residents will have to wait and see if Mr. Baker is able to tackle a problem that has been years in the making and will not disappear soon. In the meantime, outside electricity suppliers see a chance to profit from the spike, and in some cases take advantage of consumers who are understandably mystified.
One of the realities of modern life is the proliferation of utterly incomprehensible bills. Trying to make sense of a cable bill, a phone bill, or an electric bill is enough to give a person a headache that will send him or her to the hospital emergency room — and wait until you see that bill.
As Steve Myrick explains in this edition of The Times, the electric bill is made up of several components. NSTAR bills Islanders for the power it delivers (delivery charges) into their homes. The actual power that turns on the lights and stove (generation charges) is sold like a commodity, and here, unlike the delivery charges, Islanders have a choice — they can buy their power through the Cape Light Compact or find another power supplier. These so-called suppliers, middlemen really, contract with various power generators to dump electricity into the New England pool from which we all draw our power.
Last week, outgoing Attorney General Martha Coakley announced that Just Energy Group Inc., a competitive retail electricity supplier in Massachusetts, had agreed “to pay $4 million to settle allegations of deceptive marketing and sales that promised savings but charged significantly higher rates, entered consumers into agreements without their consent, and charged costly termination fees.”
The AG’s office said that Just Energy, through a third-party telemarketing vendor and door-to-door agents, “engaged in deceptive marketing and sales that misled consumers into signing contracts based on attractive introductory pricing, only to later increase their electricity supply costs.”
According to the settlement press release, “Just Energy sales representatives allegedly failed to disclose complete and accurate pricing information to its customers by promising savings or representing that they could help consumers keep their electricity bills low. Instead, consumers were charged rates that were higher than the rates for the electricity supply provided by NSTAR and National Grid. Just Energy also allegedly induced elderly and non-native-English speaking consumers by continuing to offer electricity supply services even after it became clear that they did not understand the terms of the proposed contract.”
Consumers are increasingly under assault by unscrupulous salespeople well versed in how to take advantage of people who may not fully understand their utility bills. Not every offer rises to the level of a scam; some may offer savings. However, Island consumers are well advised to be cautious, and when in doubt, ask questions and seek advice from someone they trust.
The AG’s consumer hotline number is 617-727-8400. Consumers with questions can also contact the consumer division of the Department of Public Utilities at 877-886-5066.