Tens of thousands of Eversource customers in Greater Boston can find relief from rising electric rates this winter from an unexpected tactic: going green.
Eversource last week unveiled plans to raise its electric supply rates by more than 40 percent as of Jan. 1 in Eastern Massachusetts, reflecting how the costs of producing electricity have skyrocketed in the last year. The main culprit: disruptions in worldwide supplies of natural gas, the most commonly used fuel for power plants in New England, following Russia’s invasion of Ukraine.
More than 150 cities and towns in Massachusetts, including Boston, offer plans that buy power on behalf of residents, often from more renewable sources. And many of those municipalities secured three-year contracts for electricity long before the war in Ukraine. Regulated investor-owned electric utilities, primarily Eversource and National Grid, need to buy power on behalf of their basic service customers twice a year in Massachusetts, and set rates accordingly.
The end result: The green-power aggregation contracts that cities and towns have adopted in the past decade for environmental reasons are now often much cheaper than the basic service through the utilities.
“For a large number of communities, this is benefitting the ratepayer,” said Geoff Beckwith, head of the Massachusetts Municipal Association.
Most residential customers in Boston were swept into the city’s municipal aggregation plan nearly two years ago. By default, city officials placed households and small business accounts into its standard plan, which gets 30 percent of its energy from renewable sources this year. (It needs to be 10 percentage points higher than the state mandate of 20 percent for Eversource and National Grid, a figure that rises every year.) Nearly two-thirds of electric customers in Boston, or about 200,000, get their power supplies via the city contract. The rest get Eversource basic service (about 80,000) or buy power from a third-party supplier and could potentially switch into the city’s plan.
Mayor Michelle Wu’s administration hopes to persuade more people to make the switch, in light of the upcoming rate hike, and to encourage those in the standard plan to “trade up” to a “Green 100″ plan for 100 percent renewable power.
The varying rates in Boston offer compelling examples of the potential savings.
Roughly speaking, the lowest-cost plan, with 20 percent renewable power, in the city’s “Community Choice Electricity” program, costs 10.8 cents per kilowatt-hour, for the supply portion of the bills. That’s compared with 11.2 cents in the city’s standard plan, and 13.9 cents in “Green 100.” Meanwhile, Eversource’s basic service charge is 17.9 cents for supply, a rate that’s scheduled to go up to 25.6 cents in January.
What does that mean for a typical house, using 600 kilowatt-hours a month? The savings add up quickly: Eversource’s supply cost goes from $108 to $154 a month in January, for the next six months, while the cost for someone in the Boston plan ranges from $65 a month for the lowest-cost tier to $83 a month for an all-green plan, locked in until the end of 2023. (Eversource also charges customers in its service territory a separate electricity delivery rate, regardless of the supplier.)
“There were a lot of times where people think green is going to cost more, but you could have 100 percent renewable energy for less than the 20 percent renewable energy that Eversource has in their supply,” said Mariama White-Hammond, Boston’s energy and environmental chief.
White-Hammond notes that consumers with Eversource’s basic plan can switch back and forth without a penalty, although it could take up to two months before that switch takes effect. She said she believes Boston’s rates will still likely be lower than Eversource’s when the utility’s supply rates change again in July, and when Boston goes out to bid again for a new contract for January of 2024.
“Because we’re going after renewables, and renewables are now significantly cheaper than fossil fuels, we’re still likely to do better,” White-Hammond said. “The worse that fossil fuels do, the more our rates will be competitive.”
It’s not just Boston. In Newton, for example, the three tiers range from 10.6 cents to 14.4 cents per kilowatt-hour — or $64 to $86 for the typical home. Newton locked in its rates around the same time Boston did. Somerville, meanwhile, only just established a new three-year contract as of this month. But its rates, ranging from 14.9 cents to 18.6 cents, will all be cheaper than Eversource’s basic supply service come January.
“It’s pretty funny the way there was angst among some people about whether we can afford renewable energy,” said Larry Chretien, executive director of Green Energy Consumers Alliance. “The virtue of aggregation, as I keep saying, is that the city of Boston ... had more flexibility than Eversource did. Eversource has to buy every six months, at a very specific moment.”
Edgar Dworsky, a Somerville resident who runs the Consumer World website, advises consumers who want the best deal to avoid getting stuck with the default service offered by cities and towns and instead to look for the tier with the lowest price.
“We’re in the middle of high inflation and people’s budgets are stretched,” Dworsky said. “Cities had different goals. Their goal was to be more green. My goal as a consumer advocate and bargain hunter is to pay the least possible for electricity service. If that’s your goal, particularly with inflation the way it is now, you’ve got to see what the actual cheapest rate is of the three plans they offer, versus whatever Eversource is offering.