Electric rate ups and downs
State pattern has gone from slow and gradual to steep increases
Sharp rate increases proposed by Connecticut’s two major electric companies will break with a pattern over the past decade of slow and gradual bumps in electric prices, state data shows.
According to numbers from Connecticut’s Public Utilities Regulatory Authority, or PURA, residential generation rates for Eversource customers have risen about 59 percent in the past 10 years, from 7.6 cents per kilowatt hour in the second half of 2013 to 12.1 cents per kilowatt hour in the second half of 2022, while residential generation rates for United Illuminating customers have risen about 38 percent over the same time.
Those increases, however, have been been relatively minor year to year, with rates rising some years and falling other years, depending on numerous factors.
That appears likely to change next year, with Eversource set to bump its standard service rate for residential customers from 12.1 cents per kilowatt hour to 24.2 cents per kilowatt hour and UI anticipating its standard service price will rise from 10.62 cents per kilowatt hour to 21.94.
Generation rates are one of two inputs in a typical electric bill, along with distribution rates.
As a result of the coming increases in generation prices, electric bills are expected to increase about $85 a month for the average Eversource residential customer and $79 a month for the average UI residential customer, pending a PURA review.
The utility companies say the sharp increases are the result of a sustained rise in natural gas prices caused by Russia’s invasion of Ukraine. Though Gov. Ned Lamont, Attorney General William Tong and other lawmakers have spoken out against the rate increases, the state appears to have little ability in the short term to block them.
Before this recent proposed increase, which would raise generation rates for both Eversource and UI customers by about 100 percent, the largest season-to-season spike in generation prices over the past decade came when Eversource rates jumped about 26 percent and UI rates jumped about 56 percent from the second half of 2014 to the first half of 2015.
That increase was also driven by an increase in natural gas prices, after cold temperatures increased fuel demand in early 2014. In that case, prices dropped again in the second half of 2015, as the price of natural gas declined, with Eversource rates falling below where they had been before the spike.
Prices fell further from there, reaching a low during the second half of 2016, before beginning to increase slowly again. Following another dip in 2021, rates rose again this year, though nowhere near as sharply as they stand to jump next year.
If the new price increases are approved, generation rates for both Eversource and UI customers will be about twice as high as at any previous point in the past decade.
“This winter looks particularly challenging for New England,” Eversource CEO Joe Nolan said earlier this month.
Connecticut has long been one of the most expensive states to buy electricity, ranking sixth among all states in 2021 (behind Hawaii, Alaska, California, Massachusetts and Rhode Island) after falling in the top four each of the previous nine years, according to the U.S. Energy Information Administration.
Experts say high costs in the Northeast owe to the region’s reliance on natural gas, as opposed to cheaper, renewable alternatives such as hydroelectric and solar power.