Islanders can expect to see their electric bills go up this winter, with Cape Light Compact and NStar both announcing increases in electricity costs beginning as early as December.
The utility companies said the price increase can be attributed to a growing demand for natural gas paired with pipeline constraints.
Cape Light Compact, which supplies electricity to 140,000 customers on the Cape and Vineyard, announced last week that electricity prices for residential customers will be going up from about 8.9 cents per kilowatt hour to about 15.4 cents for December to July 2015 meter readings.
While this represents a 73 per cent increase, electric bills will not be going up by that amount. Cape Light Compact purchases power on behalf of its customers, but those prices are not the only component of their customers’ electricity bills. NStar serves as the distributor for power, and each electricity bill includes distribution charges from NStar which include a fixed $3.73 monthly charge and, for the basic residential customer, about 10.5 cents per kilowatt hour in delivery costs.
On Tuesday, NStar said these costs are not expected to change.
The second part of the electricity bill, the actual cost of electricity, will be going up for most customers regardless of provider, part of a regional trend.
The average Cape Light Compact customer uses 540 kilowatt hours of energy per month, Cape Light Compact senior power supply planner Stephan Wollenburg told the Gazette.
For the average customer, the electricity bill will be going up by about $35 per month, from about $108 to $143, a 33 per cent increase.
“It’s a substantial increase,” Mr. Wollenburg said. “It’s really, really big, no doubt about it.”
NStar spokesman Rhiannon D’Angelo said that while the majority of Vineyard customers get their power from Cape Light Compact, some use NStar. NStar, too, has announced that its electricity rates are going up from 9.4 cents per kilowatt hour to about 15 cents starting Jan. 1. NStar, which serves 1.4 million customers in Massachusetts, said that for the average customer, bills will be going up $28, or 29 per cent.
Mr. Wollenburg said Cape Light Compact, like other electricity suppliers, is dealing with rising prices that are not likely to go down soon.
“Wholesale prices for electricity started going up winter of 2012/2013,” he said. In New England, he said, the amount of natural gas consumed has increased without investing in new pipeline capacity.
Mr. Wollenburg said the amount rates have gone up has increased in magnitude over time. “It generally takes a bit of time for the wholesale price to trickle down to the consumer,” he said.
In an early November press release, NStar said that more than half of New England’s electricity is produced using natural gas, which is an abundant and inexpensive fuel. But regional pipeline limitations and dependency on natural gas are nudging electricity prices upward, NStar said.
While customers can opt out of Cape Light Compact, Mr. Wollenburg urged caution for those looking into other energy suppliers.
“The important thing to keep in mind is that pretty much everyone buys at least most of their electricity through the same market,” he said. “People may be able to do a slightly better price here or there, but there’s no way to offer a price way better . . . if you get an offer that looks way better than what anyone else is offering, you need to make sure you really know what’s going on.”
He said some companies will try to sell electricity in a month when the cost is low, though the majority of electricity costs are driven by the winter months December through March, when rates can be three or four times as much as they are in April or September. So low rates can give way to market rates, which can be up to quadruple the introductory cost.
While people shouldn’t be scared away from looking for other offers, Mr. Wollenburg said, there are potential pitfalls. Those in the market should “do their homework and read the fine print.”
“What we tell consumers they should take away from that is that the most important thing they can do is energy efficiency,” he said. “By being really smart and pretty lucky they could do better than what the compact could offer, but the way to guarantee they save money is to take advantage of all the energy efficiency available.”
Cape Light Compact has also started a campaign to help lower electricity bills through efficiency; the company also offers a free energy assessment and rebates for some energy-saving measures.
NStar also offers a free home energy assessment and several energy efficiency rebates.
Paul Pimentel, chairman of the Vineyard Power board of directors, said the cost of electricity goes up when a large amount of natural gas has to be squeezed through a small number of pipes. “You’ll see this pattern over the next four or five years until we solve this pipeline problem,” he said.
Vineyard Power is an Island-based energy cooperative that is involved in bringing solar and wind turbine-based power to the Island. Mr. Pimentel said the rising costs of electricity brings home why the cooperative was created.
“We’re trying to break free of those relatively global impacts that we suffer from, being the end of the supply chain,” he said.
“One of the beauties of renewable energy is it’s not affected by a pipeline or anything like that,” Mr. Pimentel said. “It’s free and it doesn’t go up.”
But for those looking to lower their rising electricity bills, “investing in energy efficiency is the most efficient thing you can do,” Mr. Pimentel said. “More efficient than wind and solar.
“The usual stuff still applies,” he said. “Turn off lights when you don’t need them, all the usual caveats that you hear. Turn the thermostat down if you can handle it.”
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