Editor, Hamilton County Express
The combination of unusually frigid weather across much of the country and higher wholesale electricity “supply” costs resulted in significantly higher bills from National Grid for January.
So much higher, in fact, that the New York State Public Service Commission on Jan. 29 authorized the utility to freeze its upstate electric rates at January’s levels for February.
This was after Nat Grid officials told the PSC energy supply prices could jump again, by up to 27 percent in February.
This writer’s most recent residential bill, where National Grid chooses the electricity wholesaler, shows supply costs have gone up 52.3 percent from January 2013 to January 2014, from 8.3 cents per kilowatt hour to 12.64 cents per kWh.
The supply costs of other utilities have not spiked like National Grid’s, and the PSC wants to know why.
In the meantime Nat Grid will issue customers an estimated $32 million credit for January bills while the PSC investigates. Customers will eventually pay Nat Grid back, if the PSC approves, but the cost would be spread out.
The PSC regulates delivery rates but not supply rates, which fluctuate based on supply and demand. Nat Grid proposed the rate freeze when officials realized supply rates would surge again during February.
According to the New York Independent System Operator in North Greenbush, on Jan. 7, New York set a new winter peak electricity demand record, 25,738 megawatts. The former record was 25,541 MW set Dec. 20, 2004.
The NYISO administers the state’s wholesale electricity market and oversees its electricity grid.
The high demand for heat has driven up the price of natural gas, which is used to generate much of the electricity in NYS.
National Grid gets its power through the NYISO. In December the NYISO paid $66.39 for a megawatt-hour of electricity, up 53 percent from November when it was $43.27.
Patrick Stella of National Grid’s public relations office said wholesale electric prices jumped an average of 50 percent in January and are expected to jump another 30 percent this month.
“The supply costs are a pass-through for us,” he said. “The money we make comes from delivery. We buy electricity on the open market, most of it through NYISO, and don’t make any money on it.
“The increases have to do with natural gas prices spiking and the cold of the last several months across the whole Eastern Seaboard, from Atlanta on up.
“Last month we deferred about $32 million in billing because our customers saw a 50 percent increase in the supply side for January and we saw another 30 percent increase coming for February. We deferred the February increase.
“National Grid has to pay it, to buy the electricity, but deferred charging its customers until maybe the summer, when bills are generally lower.”
Bills are also up because it has been colder outside than last winter.
“If you heat your house to 68 degrees, it’s going to cost more to heat it to that temperature when it is zero outside as compared to 20 degrees,” Stella said.
It doesn’t help that New York is one of the most expensive for electricity, coming in third behind Hawaii and Connecticut. And Hawaii doesn’t have to deal with polar vortexes and the frigid temperatures they bring.