National Grid requesting 19-percent rate increase in R.I.
PROVIDENCE, R.I. — Rhode Island electric rates are set to continue a roller-coaster ride that sees them dip down in the warm-weather months and surge higher when temperatures drop under a proposal National Grid filed Thursday with state regulators that calls for a 19-percent increase in the bill for the typical residential user starting Oct. 1.
Under the filing submitted to the Public Utilities Commission, the residential customer who uses 500 kilowatt hours per month will experience an increase in their monthly bill of $18.97, to $118.60. Commercial users will see similar increases, ranging up to about 21 percent for a customer that uses 1,000 kilowatt hours a month. The rates would remain in effect until the end of March.
The proposed increases are driven by the cost of energy, which generally fluctuates in New England on a seasonal basis, mirroring demand for natural gas, the dominant fuel source for power plants in the region. When demand for natural gas goes up for home heating use, the price of the fuel for power generation goes up too, which is reflected in higher electric rates.
The increases are also caused in part by the closures of old, inefficient power plants, like coal-burning Brayton Point Power Station, and New England’s ongoing efforts to put in place more generating capacity.
The new filing impacts so-called “standard offer” rates, which represent the cost of energy that National Grid buys on wholesale markets and, by law, passes on to ratepayers without profit. The new standard offer rate for residential customers proposed by the company would go up from the current 8.5 cents per kilowatt hour to 12.1 cents.
Timothy Horan, president of National Grid in Rhode Island, called the increase in energy costs a “major concern” and urged the company’s 497,000 electric customers to participate in incentive programs to tamp down usage, such as replacing incandescent light bulbs and installing high-efficiency boilers and furnaces.
“While we don’t control the supply cost of electricity, we do have energy-saving programs and other measures available to help our customers take control of their bills,” he said in statement. “When the region is facing such high electricity supply prices, it’s critical that our customers recognize how participating in these programs can put them in charge and lower their energy costs.”
The company and the state Division of Public Utilities and Carriers both largely attribute the rate increase to high prices in the regional energy market managed by Independent System Operator New England. ISO-NE holds auctions to ensure a power supply for the region three years before it’s needed. Excess capacity kept prices down until the auction to secure capacity for 2017-18, when there was a deficit in resources.
“While the closing of coal-fired power plants is a positive step forward for the environment — the closures do have short term impacts on the markets and regional energy supply,” National Grid said in a statement.
Capacity prices went even higher for the 2018-19 auction. They have since come down steadily, but ratepayers won’t feel the effects of the decline until next year.
“This is essentially the outcome of market forces at the regional level,” said Macky McCleary, administrator of the Division of Public Utilities and Carriers.
Even though the prices are for the most part caused by larger trends, McCleary said that the prices in Rhode Island will probably be among the lowest in New England. Because of the way National Grid buys power for Rhode Island users — by staggering contracts years in advance and other methods — electric prices are generally lower than those in Massachusetts and Connecticut.