With no relief in sight for the problems that are causing winter price spikes in the wholesale cost of electricity in New England, the New Hampshire Electric Cooperative (NHEC) Board of Directors has authorized an increase in the energy charge portion of its members’ bills.
The Co-op Power rate, which represents the actual cost of the electricity used by members, will increase from 8.97 cents per kilowatt-hour (kWh) to 11.6 cents per kWh. As a result of the increase, the typical NHEC member using 500 kWh per month will see an overall bill increase of approximately $12.47 per month, or 12.2%. A slight decrease in the Regional Access Charge is lessening the full impact of the Co-op Power rate increase, but not enough to offset the skyrocketing price of power for winter delivery.
Why are Prices Spiking?
Natural gas prices are driving up the price of wholesale electricity, due to New England’s reliance on natural gas for nearly half of the region’s electricity. Though large new supplies of natural gas are being extracted nearly on New England’s doorstep in states like Pennsylvania and New York, a lack of pipeline capacity into the region that is adequate to handle winter demands is causing the price of natural gas for winter delivery to climb sharply. This has caused a corresponding increase in the price of wholesale electricity.
“These high winter wholesale costs will be working their way into the energy prices of most all the region’s electricity suppliers over the next few months,” said Steve Kaminski, NHEC Vice President of Power Resources and Access. “New England ratepayers will feel the impact until the pipeline capacity challenge is met or new sources of electricity make their way into New England.”
The Effects of Winter Market Prices on Co-op Power
Most of the electricity NHEC buys for use by its members is contracted for in advance at fixed prices. After last year’s delivery problems and price spikes, however, suppliers are now charging large premiums for forward winter purchases, based on expectations of repeated and continuing seasonal problems. As NHEC’s older purchase contracts expire and are replaced, those premium winter prices are becoming a bigger part of the Co-op Power resource mix, as well as for all the companies selling electricity in New England.
In addition to forward purchases, NHEC relies on the spot market for a small portion of its members’ needs. Spot prices generally turn out on average to be lower than advance purchases but are more volatile and subject to extreme price spikes during times of stress on the supply and delivery system, so NHEC does not depend heavily on them.
Conservation, Energy Management Can Help
As power rates increase, NHEC is encouraging its members to practice energy conservation and take advantage of a new tool that allows them to monitor and manage their energy usage. Thanks to NHEC’s recent installation of Smart Meters across its service territory, members are now able to view their monthly, daily and hourly electric usage online at NHEC.coop. This information can provide the opportunity to view usage patterns and make efficiency or usage choices that can save energy and money. NHEC also has a Web site at SmallSteps.coop with a host of energy saving tips and advice, including links to Co-op Energy Solutions efficiency programs.
Expect a Rate Reduction in May 2015
Because the causes of the wholesale price spikes are so seasonal in nature, NHEC currently expect a substantial reduction in the Co-op Power rate on or around May 1, 2015 at the start of the summer pricing period.
Headquartered in Plymouth, New Hampshire, NHEC is a member-owned electric distribution cooperative serving 83,000 homes and businesses in 115 New Hampshire communities, including Andover.