Residents, businesses grapple with looming electricity rate spike

CEO Jim Doremus was surprised to learn this fall that the Concord Family YMCA’s operating costs will jump more than $20,000 over the next year and that the increase will be coming from the nonprofit’s electricity bills.

“This is a surprise there’s very little we can do about,” said Doremus, who oversees the YMCA’s programming and two buildings off Warren Street.

Over the next few months, the YMCA’s electricity rate will increase by 50 percent, Doremus said. It is the most dramatic increase the nonprofit has seen and will tack on an additional $22,000 to the nonprofit’s electricity costs, which now account for more than 1 percent of the $2.8 million operating budget. The increase means that the YMCA will need to raise more money in order to both offset the electricity cost and keep up its programming. 

“We can’t control this, we have to react to it, absorb it,” Doremus said. “We’re not in the electricity market, we’re in the kid and people business.” 

The YMCA isn’t alone. Rising electricity rates this winter are a reality for many residents and business across the state. Both Liberty Utilities and Unitil announced recently they are expecting residential customers’ rates to increase roughly 50 percent when new winter rates go into effect.

And for the next few years, the higher winter rates may be a new normal throughout the region until a long-term market solution takes effect, according to officials. 

“We’re in a precarious operating position for the next couple years,” said Eric Johnson, of the regional grid operator ISO-New England, at an energy summit in Concord last week.

The region’s rising electricity prices are linked to natural gas. The fuel has become popular among power generators because it’s cost-effective and cleaner to burn than coal, among other reasons. Nearly half of New England’s electricity is now generated by natural gas, compared with just 15 percent in 2000. But officials say the region doesn’t have the pipeline infrastructure to match the need. 

The problems arise during the winter, when electric power generators and home heating companies are both vying for natural gas, which is funneled to the region through pipelines coming from the Pennsylvania area. 

Home heating companies buy a piece of the natural gas pipeline capacity – based on how much fuel they will need to serve their customers – and then they sell any excess to the electric power generators in the secondary market. But on the coldest days during peak times, natural gas is in high demand by home heating customers, which means little is left for electricity generators, causing prices to skyrocket.

The price volatility is reflected in recent rate changes.

Both Unitil and Liberty Utilities filed with the Public Utilities Commission for rate changes this month that will nearly double the companies’ energy charges. The PUC signed off on Liberty’s filing, which will increase to 15.4 cents per kilowatt-hour of electricity, from the current rate of 7.73 cents starting Nov. 1. On Friday, the PUC cleared Unitil’s energy charge increase that will rise from the current 8.4 cents per kilowatt-hour to 15.5 cents starting Dec. 1.

The New Hampshire Electric Co-op announced it too is raising rates this winter. The energy charge increased to 11.6 cents per kilowatt-hour from the current rate of 8.97 cents Oct. 1. Those changes, the companies have said, could mean average customers will see their monthly electric bills increase between $12 to $50 overall.

Public Service of New Hampshire forecasts its rates will remain relatively stable and has yet to officially file with the PUC for a change. PSNH, the largest utility in the state, is the only one in New Hampshire that operates its own generating plants.

The rate announcements have prompted concern among businesses and residents alike. Since utilities began announcing upward rate changes two weeks ago, the PUC Consumer Affairs division has received more than 20 calls.

“People are concerned about how they are going to manage this and whether they have any options,” said Amanda Noonan, director of PUC Consumer Affairs. “It’s a huge increase for them.”

Shannon Nolin, who oversees the Community Action Agency’s Electric Assistance Program, said she expects that the higher electric rates will take a toll on the state’s low-income residents. 

This year, CAP has received an increase in the number of fuel assistance applications, which usually go hand-in-hand with electric assistance requests, Nolin said. 

“It’s going to be a tough winter for low-income folks,” Nolin said. The electric assistance program helps roughly 35,000 families pay their bills. Roughly 40 percent of those households are senior citizens and disabled residents make up between 10 and 15 percent. 

The program’s applicants “are on a very limited income,” Nolin said. “Between housing and electric bills, they often are spending all their money just on those two items.” 

Consumer advocates encourage residents to enact energy conservation and efficiency measures to lessen electricity costs in the short-term. 

“The first thing everybody can do is low cost, no-cost conservation measures,” Noonan said. For example, she said, using a microwave or toaster oven is more efficient than firing up an entire oven. Nolin suggests families go over electricity bills together and find places to cut back usage.

Officials also suggest consumers look into competitive energy providers that supply just the energy portion of the electric bill. Those suppliers offer fixed or variable energy rates for differing contract lengths. Consumer advocates advise customers to understand the competitive energy contract they sign, what type of rate they choose and what happens at the end of the contract. The PUC offers tips on purchasing competitive power on its website.

Variable rates can shoot up during the wintertime, said Susan Chamberlin, the state’s consumer advocate. “Last winter, some customers saw a 100 percent increase in their bill during the January cold spell,” she said. 

Last winter, Madison resident John Arruda went to a competitive supplier to seek a better price. When his fixed-rate contract ended, it lapsed into a variable rate. And his energy charge skyrocketed from 7.9 cents per kilowatt-hour to 32 cents in four months. “It cost a couple hundred dollars,” he said. “People need to be very, very careful.” 

The YMCA began seeking competitive alternatives about four years ago, when the management noticed electricity costs on the rise. After shopping competitive suppliers this year with the help of a broker, the YMCA settled on the lowest-cost bid, yet they are still anticipating a spike in price. 

“We’re committed to providing services. It’s part of our mission,” Doremus said. “It just makes it a whole lot more challenging when you see a tremendous spike.”