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National Grid electric price rising fast, going up more next month; state asking why

Posted 1/29/14

On top of a nearly 50 percent price increases between November and January, and electric rates expected to rise by as much as 27 percent more in February, National Grid has sought and received …

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National Grid electric price rising fast, going up more next month; state asking why

Posted

On top of a nearly 50 percent price increases between November and January, and electric rates expected to rise by as much as 27 percent more in February, National Grid has sought and received permission from the state Public Service Commission to spread out customer payments to ease the shock.

The cold, and presumably the rising cost of power-generating fuel, is the cause of the price spike, according to a statement from the PSC, but the commission says it is looking into why the winter cost of National Grid’s electricity is rising so much more than that of other electric utilities in the state.

“While all utility customers in New York State are facing higher-than-normal electric bills due to the unusually cold weather, electric supply increases for National Grid’s upstate residential and small business customers had been expected to be much higher in February than any other area in the state,” the PSC statement said.

The upstate utility, which supplies electric power to almost all of St. Lawrence County except Massena, will freeze rates at January levels while they and the commission figure out how customers will repay what amounts to a temporary $32 million credit on their bills to cover the spike.

The commission regulates and electric utility's delivery charges, but the other major part of a customer's bill, supply prices, "are largely determined in the wholesale marketplace and fluctuate. The underlying reasons for National Grid’s supply price increases are high natural gas prices and electric transmission constraints," according to the commission's order of yesterday.

National Grid asked that "the deferral be collected in future months in a surcharge" over four or six months beginning in May, but set up so that it does not overlap with the next winter season. “The Company states its request is contingent on it receiving carrying costs for the adjustment," the order said.

"The tariff waiver is necessary to allow National Grid to mitigate what would otherwise be a third straight month of significant supply price driven bill increases within the utility’s service territory. Between November and January, typical National Grid residential customers using 600 kWh per month have experienced as much as nearly fifty percent increases in their electric bills. Absent our approval of the waiver, the hardest hit customers would experience additional bill increases in February of over 25 percent.” the PSC’s order said.

Based on National Grid’s forecast of commodity prices for February, cost for a typical residential user of 600 kilowatt-hours in a month would have risen in February somewhere between $12.75 (17.6 percent) and $29.74 (27.2 percent), “depending on the customer’s location,” the PSC said. “For small commercial customers, predicted increases for the total typical bill using 1,500 kWh ranged between $34.66 (17.9 percent) and $77.88 (27.6 percent), depending on the customer’s location.”

While average residential bills for the other utilities have increased over the same time period, those increases are less than what is being experienced by National Grid customers. “The unique aspect of what National Grid customers are experiencing in terms of higher-than-normal price increases prompted the Commission to act,” the PSC said, and prompted their promise to look into why.

“Given the unusual electric supply price hikes that National Grid has been experiencing, the Commission felt that it was reasonable to take action now to offset the increase. Meanwhile, given the nature of this region-specific increase in supply costs, the Commission will be reviewing the reasonableness of National Grid’s hedging practices and retail rate mechanisms to avoid similar occurrences in the future,” the PSC release said.

On Jan. 7, New York set a new winter record peak demand for electricity of 25,738 megawatts, beating the previous record winter peak demand of 25,541 MW set in December 2004. That is still well below the summer peak demand record of nearly 34,000 MW set last July.

The commission’s deal with National Grid will “allow future recovery from customers in a manner and over a period to be determined later by the Commission. The credit will allow the expected increase in February prices to be spread out over a longer period of time,” the PSC said.