A few weeks ago, the PURA approved new winter rates for Eversource and UI standard offer customers. Eversource customers will pay 18% less this year and UI customers expect to pay 15 % less this year when the new rates take effect on January 1, 2017. A significant number of Connecticut electricity customers will see lower rates since nearly two-thirds of Connecticut’s residential customers are signed up for the standard offer generation from Eversource or UI.
But what if you’re signed up with an electricity retailer as your supplier —will you see lower winter rates, too?
Yep!
Consider the fact that as a regulated energy distribution company, “Eversource purchases electricity from wholesale suppliers on behalf of its customers and passes the cost directly to them with no profit to the company.” Eversource and UI are not the only power companies in Connecticut buying electricity. Third party electricity suppliers in Connecticut also purchase their electricity from the wholesale electricity markets.
And the price of Connecticut’s electricity is set by the cost of natural gas.
Cheap Natural Gas = Cheap Electricity
This past summer, the prices of the Standard Service Supply Charge (that’s the commodity price passed on by both Eversources and UI) fell to 6.61¢/kWh. The decline came about because last year’s El-Niño-warmed-winter left a huge amount of unneeded natural gas in storage. Natural gas currently supplies 50% of total generation in New England. Since there’s little heating demand in summer for natural gas, even the amount burned to generate electricity did not increase the price much.
New England’s limited natural gas pipeline transmission capacity also has added to the price of natural gas. Spectra’s 1,100 mile long Algonquin pipeline supplied natural gas to new England through a modest 26 inch diameter pipe. During winter cold snaps, it’s inability to meet demand increased prices. This past month, the controversial Algonquin Incremental Market Project (AIM) began moving natural gas to New England through a new 42inch diameter pipe. The total AIM Project capacity is 342 million cubic feet per day. On Nov 23, the FERC approved Algonquin’s request to provide up to 245 million cubic feet per day.
That additional capacity can substantially reduce the peak winter month price Connecticut generators have to pay.
The Crest of the Cheap Natural Gas Wave
The US Energy Information Administration’s current (November 8) Short-Term Energy Outlook forecasts a decline in natural gas output and a 21% increase in consumption this winter due to a somewhat colder winter. Natural gas commodity prices are expected to rise in 2017 due to continued rising demand and this increase will likely fuel an increase in your electric bill —no matter whether you’ve signed on with an electricity supplier or the standard offer.
Shop Now & Protect Yourself From Rising Rates
Because PURA sets the standard offer every six months, Connecticut’s standard offer customers can not lock-in today’s low rates at a fixed rate for 12 and even 24 month periods. Plans like these are offered by retail electricity suppliers and it’s only these plans that shield consumers from rising prices and unexpected price spikes. You’ll find affordablity and peace of mind from a stable price. The best place to find the best plans that will save your family the most money is Connecticut Energy Ratings!