A significant hike in electricity and gas prices proposed by one of Massachusetts’ main utilities could soon leave many Boston residents — including students who live off-campus — spending more on their monthly bills.
The power company, called NSTAR, filed for a 29 percent increase in its Basic Service supply rate, which would become effective on Jan. 1. NSTAR serves 1.4 million customers in eastern and central Massachusetts, and is the main supplier of electricity in Allston, a hub of off-campus living around Boston University.
Rhiannon D’Angelo, a spokeswoman for NSTAR, said the average residential customer’s bill would increase by about $28 a month. She said the boosted prices are due to constraints on the existing pipeline infrastructure that delivers gas to the region. Rates are changed twice a year, on Jan. 1 and July 1.
“We file for rate changes twice a year,” she said. “This year, due to a dramatic increase in the price of electricity that NSTAR buys on behalf of our customers, we filed last week for an increase in our Basic Service supply rate.”
The proposed rate would increase to roughly 14.972 cents per kilowatt-hour, according to a press release from NSTAR. The proposed rate was announced on Friday and was filed to the state’s Department of Public Utilities, D’Angelo said.
D’Angelo said the new rate reflected additional costs in the electricity prices NSTAR pays, and was not a move to boost company profits.
“As a regulated delivery company in Massachusetts, NSTAR purchases electricity from our suppliers and then we pass the cost with no profit added directly to the customers who are on the Basic Service supply option,” D’Angelo said. “This charge is a complete pass through.”
Gloucester-based energy consultant Jerrold Oppenheim said the price hikes could be especially detrimental to low-income families.
“It’s going to be very, very difficult for low-income families to manage that kind of increase,” he said. “The main point is that increases in volatility for necessities like that are extremely difficult, especially for people who are already struggling just to put food on the table.”
The reason for the price increase stems from a flawed wholesale market system, Oppenheim said. The generator-based system that is common in the Bay State area is more costly because of pipeline infrastructure.
“It [generation fuel] is cleaner than the alternatives of principally coal and earlier oil, but there is a finite amount that can be shipped here because of the pipeline infrastructure,” he said. “We encouraged the building of gas plants without paying much attention to it [the infrastructure].”
Several Boston residents expressed their concerns for the price hike, saying the additional costs would quickly add up.
Sarah Moody, a freshman in the College of Communication, said the new rates would specifically inconvenience students, especially many who turn to NSTAR for their energy.
“The increase would be an issue, especially if you’re a student living in an apartment,” she said. “Being a student, you already don’t have enough money, so it’s an added burden.”
Richard Manning, 65, of the West End, said because the increase is so sudden, it would have a detrimental effect on customers.
“It sounds like it’s very harsh,” he said. “It’s too much too fast. If they did it in stages, the increase would be more palatable.”
John Sullivan, 62, of South Boston, said the increasing prices were unavoidable.
“It’s going up. What else is new?” he said. “But you don’t have a choice, otherwise you can’t put the lights on, can’t cook [and] can’t wash your clothes.”
Correction: In the original version of this article, we incorrectly stated that the proposed rate would increase to $14.97 per kilowatt-hour. The proposed rate will increase to roughly 14.972 cents per kilowatt-hour. Additionally, NSTAR files changes twice a year, rather than once every year, as we had originally stated NSTAR is a regulated delivery company in Massachusetts, rather than a regular delivery company, as we has originally stated. In the original version of the article, we stated that D’Angelo said the new rate reflected additional costs in delivery by NSTAR. What D’angelo actually said is that the new rate reflected additional costs in the electricity prices NSTAR pays.
Investor-owned utilities (IOUs) NStar, National Grid, WMECO and Unitil have much to learn from our 41 Massachusetts municipal electric utilities (munis).
Since 2003, munis consistently charge less than IOUs for the same electricity (massmunichoice.org). Unlike NStar’s and National Grid’s upcoming 29% and 37% rate increases, munis will not charge more because of high natural gas prices.
State law requires IOUs to purchase their electricity supply for up to 6 months, supposedly to ensure that IOUs purchase as cheaply as possible since they pass those costs on to their customers. But there is a better way to protect IOU customers from high electric rates.
Our new Governor should get legislation passed to:
let IOUs buy their bulk electricity long-term to avoid spikes in fuel prices — as munis, large businesses and municipalities already do;
allow the creation of new munis, creating competition for IOUs to force them to better control all their costs, including their electricity supply;
make the Department of Public Utilities (DPU) check retrospectively that IOUs implemented all the improvements promised when rate increases were approved (for example, modernizing their network infrastructure to increase reliability), something DPU doesn’t do today.
Massachusetts is a deregulated market for electricity. This means you can shop around for the Supply portion of the electric bill. You can choose the rate you pay! Most people don’t know they have a choice, but they do! It’s easy and simple, can be done online in a matter of minutes. Learn more here or contact me to help http://www.viridian.com/davcoh