Price period change provides some relief; need for gas pipeline critical as cause for 2015 price spike remains
October 19, 2015
PROVIDENCE, R.I. – National Grid's Rhode Island electric customers could see a reduction on their monthly bills starting on January 1. The company is asking the Rhode Island Public Utilities Commission to lower the current price customers pay for their electricity supply from the current $0.104 per kilowatt hour (kWh) to $0.089 per kWh. If approved, and when combined with existing delivery charges and other adjustments still to be acted on by the PUC, customers will see a reduction of anywhere from 7.5 percent to 8 percent. A typical residential customer using 500 kWh is now paying $99.15 per month.
As directed by the PUC, the lower price will be in effect from January through September as the state transitions from January through June and July through December price periods to October through March and April through September periods. The upcoming, one-time, nine-month price period includes the warmest weather months of the year, when electricity supply prices are lower than during cold weather months. Including pricing from warmer months, helps to offset the higher electricity supply prices that are typical of the colder winter months.
“National Grid realizes that while this modest price reduction can be seen as good news, it may be the exception to the winter pricing rule,” said Timothy F. Horan, president of National Grid in Rhode Island. “Our region will continue to see price volatility as long as natural gas pipeline constraints during the winter months drive up the cost of electricity for that time of year.”
With about half of New England electricity generation fueled by natural gas, New England wholesale electricity prices are relatively higher during winter than the rest of the year. This is due to capacity constraints on the natural pipelines feeding the region. These constraints decrease natural gas availability at times of peak demand, causing some generators to buy gas on the spot market at higher prices, switch to alternate fuels or not run at all. This increases generator costs, which drive up wholesale market prices for energy, which is the main component of electric supply rates.
In late in 2014 the projected increase in electricity supply costs for the coming year forced the National Grid to request a more than 26 percent price increase that would take effect on January 1, 2015 to cover the standard six-month January through June price period. The PUC opted to grant a 14.3 percent increase for all of 2015. This had the effect of decreasing Rhode Island winter bills but increasing summer bills from what they might have been.
Rhode Island faces the same winter pricing issues as has been experienced in the rest of New England. Modifying the length of the electricity supply price period won’t change the fact that mid-winter market prices are volatile and will continue to remain high in upcoming winters if no upgrades to the gas pipeline infrastructure are made. Once Rhode Island reverts to a six-month price period in October 2016, customers could see a higher winter electricity supply price when compared to summer, as Massachusetts is experiencing now.
The section of the electric bill where customers will see the difference is called Supply Services. This section of the bill represents the cost of the electricity the company purchases on behalf of customers and passes on without a markup.
National Grid delivers electricity to our customers. The company does not generate electricity and plays no role in determining market prices. National Grid encourages customers to consider all available electricity supply options. You may learn more about alternative suppliers by visiting here. Regardless of your chosen supplier, National Grid will continue to deliver reliable energy, respond to service and emergency needs and provide storm restoration services.
Need Help With Your Energy Bills?
National Grid has a three-decade history of helping New England customers realize energy savings through energy efficiency programs. In addition to energy efficiency tips and opportunities, billing options and discounts also are available to help eligible customers who may have difficulty paying their monthly gas or electric bill.
National Grid offers billing programs to help customers spread payments out more evenly across the year, which is particularly helpful to those on fixed incomes. Discounts are based on certain eligibility requirements. For more information about energy efficiency or the availability of these discounts, customers should visit www.ngrid.com/billhelp or contact National Grid at 800-322-3223, your local Community Action Agency or the RI Department of Human Services.
About National Grid
National Grid (LSE: NG; NYSE: NGG) is an electricity and natural gas delivery company that connects nearly 7 million customers to vital energy sources through its networks in New York, Massachusetts and Rhode Island. It is the largest distributor of natural gas in the Northeast. National Grid also operates the systems that deliver gas and electricity across Great Britain.
Through its U.S. Connect21 strategy, National Grid is transforming its electricity and natural gas networks to support the 21st century digital economy with smarter, cleaner, and more resilient energy solutions. Connect21 is vital to our communities' long-term economic and environmental health and aligns with regulatory initiatives in New York (REV: Reforming the Energy Vision) and Massachusetts (Grid Modernization).
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