More Price Increases Ahead for MA National Grid Customers
More bad news for National Grid customers in Massachussetts this weekend: after announcing an almost 40 percent rate increase for winter electricity supply, the utility recently filed a proposal with the department of utilities to increase its electricity distribution rates.
Why the rate increase?
As a reminder, the price of electricity in Massachussetts can be separated into two types of charges: the cost of the electricity you consume (supply charges), and the cost of delivering it to your home (delivery charges). As the electric utility company for 1.3 million customers in Massachussetts, National Grid has the exclusive right to deliver electricity to customers within its territory. However, its rates are regulated, and must be approved by the state Department of Public Utilities. The company also sells electricity supply to its customers, though they also have the option of choosing a supplier and paying a different rate for their supply.
While National Grid's rates for electricity supply change fairly regularly, this is the first time the utility has updated its power distribution rates since 2009. In the meantime, however, the costs of doing business have risen considerably, according to the utility; utility poles are now about 9 percent more expensive, and the cost of transformers has risen by about 20 percent. The utility's property taxes have also doubled to $58 million over the last six years, and billing and administration costs have also risen. The proposed rate increase would bring in an additional $143 million a year, which would reflect the cost of doing business during the year ending June 30, 2015, according to the company's news release.
How will it impact Massachussetts electricity customers?
As of Nov. 1, 2015, the typical National Grid residential customer's monthly bill was $110.18 (for about 500-kilowatt-hours consumption per month).
The rates proposed would increase most residential bills by about seven percent, adding almost nine dollars to the average customer's monthly bill. The price increase would include a $1.50 increase to the monthly customer charge, as well as an increase from 4.3 cents to 5.5 cents per kilowatt hour for distribution rates. The impact on commercial and industrial customers' bills would vary, with National Grid predicting bill increases between one and eight percent. If approved, the new charges would take effect October 1st, 2016.
Can customers avoid rising bills?
Unfortunately, as this rate hike concerns delivery charges, there's nothing National Grid customers can do to avoid it. However, if you are a National Grid customer in Massachussetts, you might be able to offset this bill increase by taking a look at the rate you pay for your electricity supply. In Massachussetts, customers in National Grid's service territory have a choice of supplier, meaning that they can choose to pay the supply rates charged by National Grid, or they can choose to purchase their electricity from a competing alternate supplier. Supply charges, which covers the cost of buying electricity from power plants, typically represents the biggest portion of an electric customer’s bill (delivery charges, according to National Grid, typically represent about a quarter of the average residential customer's bill). This means that you can make big savings by paying a different rate for your electricity supply.