N.H. electric customers are not alone
Although recent natural disasters have hardened us to many shocks, the 60 percent increase in electric rates for Unitil’s large industrial and commercial customers was still quite startling. Is this indicative of what is happening in the rest of New England and other areas of the country? Is there any good news on the energy front or anything good that can come out of such an increase?
The Hampton-based utility said it had to raise rates because “we are in an energy crisis,” said George Gantz, senior vice president of customer service and communication for Unitil. The higher rates will go into effect Nov. 1 for customers that use 100,000 kWh per month or more. Those rates will stay in place for six months, at which time the company could go out for bids again.
Unitil got bids from various energy suppliers and chose Consolidated Edison Energy Inc. as the winning bidder. Both Anne Ross, the PUC’s consumer advocate, and George McCluskey, the PUC’s utility analyst, recommended the PUC approve the rate hike request, though Ross was quoted as saying that the hike was “alarming.”
Although the PUC staff recognized the very substantial increase in rates that the so-called G1 customers would face, McCluskey said the rates are reasonable, considering current market conditions, and believed Unitil chose the bidder with the lowest price and highest value.
One effect of these new rates could be to encourage the affected customers to shop around individually or as groups for an alternate supplier — large customers are free to try to obtain cheaper rates from alternative suppliers. In other words, this could be the catalyst to get the competitive market in New Hampshire started.
Reportedly, a number of suppliers serving industrial and commercial customers in Maine are gearing up to make offers to these Unitil customers. Whether customers take the time and effort to shop around for a better rate and whether they can in fact obtain a better rate, however, remains to be seen.
Rate increases for electricity have become fairly common around the country, even in states where electric utilities have not been deregulated and they generate much of the power they use to serve customers.
The Olympian newspaper in Washington state reported recently that Puget Sound Energy is seeking a rate increase of $55.6 million in additional annual revenue to pay for fuel and power purchases required to meet customer demand.
Specifically, the money will be used in part to cover the escalating cost of natural gas used to fuel power plants that burn gas to produce electricity and offset higher costs for hydropower and Bonneville Power Administration transmission line rates.
The last increase in Puget Sound Energy electricity rates was 4.1 percent in March. Last month, the utilities commission granted Puget Sound Energy permission to raise the monthly bills of residential natural gas customers by 14 percent, effective Oct. 1. Commercial and industrial customers saw a 15.4 percent increase.
According to the Montana Standard, NorthWestern Energy, which serves 300,000 customers in western, central and portions of eastern Montana, filed a request recently with state regulators to increase electric rates about 5 percent for the coming year.
The increase, which must be reviewed by the state Public Service Commission, would hike the average household customer’s bill by about $40 a year. It also will be adjusted monthly to reflect the changing cost of power on the open market.
The increase, if approved, comes on top of a 27 percent increase in natural gas rates for NorthWestern customers, effective in September. NorthWestern officials said the requested electricity increase is the result of rising market prices for electricity, which like most energy prices have shot up in recent weeks and months.
“During the last two months, (wholesale) electric prices have gone up about 45 percent,” John Hines, director of energy supply for NorthWestern, was quoted as saying.
About 70 percent of that power is supplied through long-term contracts, which aren’t affected by the current high-priced market. But the company must buy the remaining power on the open market, which has seen dramatic price increases.
NorthWestern doesn’t own any power plants of its own, so it must buy electricity from independent power producers, marketers who sell to NorthWestern at unregulated prices or both. About 70 percent of that power is supplied through long-term contracts, which aren’t affected by the current high-priced market. But the company must buy the remaining power on the open market, which has seen a dramatic increase.
Since deregulated electricity markets have kicked in for NorthWestern’s smaller Montana customers in mid-2002, the price they’ve paid for electricity has nearly doubled. If the new rates are approved, prices will have gone up 118 percent since mid-2002.
Doug Patch, former chairman of the New Hampshire Public Utilities Commission, is with the Concord law firm of Orr and Reno.