Business

NStar seeks 29 percent hike in electric rates

NStar on Friday became the second utility in recent weeks to deliver a winter shock to Massachusetts energy consumers, asking state regulators for an average 29 percent increase in electric bills starting in January.

The monthly bill for the average NStar household will rise about $28 a month, according to the utility, which serves more than 1 million customers in metropolitan Boston and Cape Cod.

“We knew this was coming,” said Jerrold Oppenheim, a Gloucester-based energy consultant focusing on low-income consumers. “It’s pretty tough for low-income folks to cope with.”

Advertisement

The price increase for electricity comes at a time when other energy costs are dropping, and the country is experiencing a boom in natural gas production. Gasoline prices are at their lowest levels in almost four years, and home heating oil prices are about 40 cents a gallon below last year’s prices.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

The cost of electricity for NStar customers will rise to the highest level they have paid for supply costs since Massachusetts overhauled its electricity market in 1998. That portion of consumers’ bills will go from 9.379 cents per kilowatt-hour to 14.972 cents.

The supply portion of consumers’ bills reflects only the cost that utilities like NStar pay power generators. The rest of a customer’s bill — currently around half — comes from the cost of delivering power to their homes. That portion of the bill will not change.

NStar blames the cost of supply, because of an overwhelmed pipeline network, for the price hike.

“Because of the current gas pipeline capacity issues, this supply rate is considerably higher than it has been over the past several years,” said Mike Durand, a spokesman for NStar.

Advertisement

NStar’s parent company, Northeast Utilities, proposed a major pipeline project in September.

NStar’s request for a rate hike follows a sharp winter price increase for customers of the state’s other major electric utility, National Grid, which received approval for a 37 percent increase, beginning this month. The price increases, which affect more than 2.3 million Massachusetts consumers, reflect New England’s growing reliance on natural gas, which is burned to heat millions of the region’s homes and generate more than half of its electricity.

However, the utility companies say that the region’s pipeline network is unable to carry enough natural gas to meet the growing demands. The pipeline constraints have limited supplies when they are needed most, particularly during winter cold snaps, and have led to soaring natural gas prices in wholesale markets and spikes in electricity-generating costs.

Until new pipelines or transmission wires are built, high winter electricity prices are likely to continue in New England, the utility companies and outside specialists warn. Earlier this week, economists at the investment service Moody’s said power costs would remain high in the region for three to four more years.

Because NStar charges customers slightly different rates depending on where they live, the increase in the average household’s bill varies. The monthly electric bill for the average household in Boston and several nearby municipalities will rise from $95 to $123, while the bill for a typical Cambridge household will go from $92 to $120. The bills of customers formerly served by Commonwealth Electric, including Cape Cod and much of the South Shore, will go up by a similar amount, from $101 to $129.

Advertisement

NStar’s request comes one day after the Massachusetts Department of Public Utilities ruled that it would not force National Grid to spread out the impact of its winter price increase over a full year. Starting this month, electricity rates for National Grid customers will be 37 percent higher than last winter and nearly 50 percent higher than in October.

National Grid provides electricity to about 1.3 million residential and business customers in the state.

In a statement, NStar emphasized that it was passing along the cost of electricity that it purchases from the companies that own and operate power plants. Durand, the company spokesman, added that customers should contact the utility for information about budget billing and tips on how to lower their bills by using power more efficiently.

“The single most important thing that customers can do to take charge of their energy use is to improve the energy efficiency in their homes,” Durand said.

NStar's cost of electricity

For residential customers.

DATA: Massachusetts Department of Public Utilities, Commonwealth of Massachusetts

Olivia Hall for The Boston Globe

Jack Newsham can be reached at jack.newsham@globe.com. Follow him on Twitter @TheNewsHam.