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National Grid predicts energy prices to drop 25 percent

National Grid prices for gas and electricity are set to drop at least 25 percent after an expensive winter, but electric rates for this coming summer will still be slightly higher than last year’s.

The state approved the utility’s basic electric service rates for May through October on Wednesday, and a typical bill for one of the utility’s million electric households will be about $91, about $10 higher than last summer. The company’s 900,000 gas customers will see their bills drop to around $29 on average, $7 below last summer.

Electric and gas rates typically fall during the summer in Massachusetts, because there is less competition for limited space in the region’s natural gas pipelines. This past winter, a National Grid customer using 500 kilowatts of electricity per month faced bills of around $122 because of power generators’ fears their costs could surge.

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“We are pleased that our customers will start to feel some relief from what we know has been a challenge to their energy budgets,” said Marcy Reed, National Grid’s Massachusetts president, in a statement. “Though we can’t take credit for the drop in energy prices, we’re committed to pursuing solutions that help stabilize electricity and natural gas costs for our customers.”

Prices for electricity shot up starting in November, which the utility attributed to competition for the region’s limited natural gas pipeline capacity. The largest share of New England’s electricity-generating capacity comes from gas-burning power plants, whose demands for fuel take a back seat to the furnaces that power homes and businesses across the state and occasionally spike.

Those pipeline constraints are still an issue, according to National Grid. The supply cost of electricity, which is what the utility pays the power plants that generate it, rose from 8.3 cents per kilowatt-hour last summer to 8.9 cents per kilowatt-hour for the upcoming six-month period. So-called delivery costs, which National Grid charges to get power to customers’ homes, are harder to calculate but also will rise slightly.

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Danielle Williamson, a National Grid spokeswoman, said higher-than-expected outlays for energy efficiency programs also led customers’ bills to increase.

National Grid does not actually generate power, and its supply costs are passed on from electric plants. Twice a year, power plant owners submit bids to utilities, which draw up contracts with the lowest bidders.

Some energy market observers said the summer price decline was a sign the region should move toward more clean energy, while others worried the brutal impact of the cold winter on the state’s poor still was not over. Charlie Harak, an attorney with the National Consumer Law Center, said residents who fell far behind on their heating bills could have their power cut off in April.

“This roller-coaster of price spikes and price drops is telling us something important,” said Ken Kimmell, the head of the Union of Concerned Scientists. “We need to diversify and not put all our eggs in the same basket. Priority number one is to develop other resources, like hydro to the north and wind offshore.”

Eversource Energy, which formerly did business as NStar and the Western Massachusetts Electric Co., has yet to submit its proposed basic service rates.

Rhiannon D’Angelo, a spokeswoman for the company, said Eversource also expected prices to drop. From July to December 2014, the average electric bill for Eversource customers in Massachusetts ranged from $96 to $101.

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Eversource supplies power to about 1.3 million business and residential electric customers in Massachusetts.

Electric bills to drop
The average monthly bill for a National Grid electric customer using 500kwh of electricity per month.
5/1/09
$77.72
11/1/09
$72.35
5/1/10
$73.22
11/1/10
$73.11
5/1/11
$67.74
11/1/11
$72.66
5/1/12
$67.28
11/1/12
$70.26
5/1/13
$73.46
11/1/13
$88.25
5/1/14
$80.96
11/1/14
$121.20
5/1/15
$90.82
DATA: National Grid
Bennie DiNardo/Globe Staff

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