National Grid customers will see their electric bills rise about 20 percent in November, but they can take some solace knowing the increase won’t be as high as last winter’s.
National Grid, one of the state’s largest utilities, on Tuesday filed residential rates with the state Department of Public Utilities that would boost the average bill to about $110 a month from the current $90. That’s nearly 10 percent less than the average $121 a month customers paid last winter.
“This winter’s customer bills will be down, absolutely down” compared to the year before, said Marcy Reed, president of National Grid in Massachusetts. “You can bank that.”
Utilities file new rates every six months, based on their costs to buy electricity from independent power generators. The state’s other major utility, Eversource, will file its winter rates this fall.
Under the state law that deregulated electricity, utilities bid twice a year for power supplies, award contracts to low bidders, and pass along the costs to customers without marking them up. The utilities make money through charges for carrying the electricity from the power plants to customers.
Rates are rising from the summer because winter supplies are more expensive, National Grid said. The cost of power, however, has moderated from last winter, when National Grid rates jumped about 40 percent. (Eversource’s climbed nearly 30 percent.)
Reed described last year’s electricity increases as a “major trauma,” saying up to 3 percent of National Grid’s 1.3 million customers are behind on payments, including thousands still paying off last winter’s bills.
New England wholesale power markets have been volatile in recent years, largely because of uncertainty about the supply of natural gas, which is used to generate more than half the electricity in Massachusetts. Two years ago, natural gas shortages, blamed on insufficient pipeline capacity, sent prices soaring, hurting power generator’s profits.
Last year, anticipating more natural gas shortages, power generators bid much higher prices, which led to the jump in electric rates.
Those shortages didn’t materialize, in part because of additional supplies of imported liquid natural gas.
“This is all crystal ball stuff,” Reed said of pricing. “You never know.”
Last winter, National Grid’s winter rate was 24.24 cents per kilowatt-hour; this year it is 22 cents per kilowatt-hour.
John Howat, senior energy analyst at the National Consumer Law Center, an advocacy group in Boston, said that in a region known for some of the highest energy costs in the nation, even small seasonal increases set consumers — and the state’s economy — back.
Howat said utility bill increases have been shown to slow consumer spending, which hurts the local economy.
“There are a lot of households in Boston that simply have insufficient income to pay for necessities each month,” Howat said. “So this just makes that problem worse.”
But more increases are likely to be on the way. National Grid said it would file a request with the state Department of Public Utilities to increase its distribution rates. Reed said the company had not yet determined the size of the proposed increases, which if approved would go into effect in late 2016.
Reed said the increases are necessary due to rising costs of materials such as copper, as well as other expenses. The utility has not received a distribution rate increase for six years, she said.
Reed said she opts to pay her electric bill on a “budget plan” that spreads out the cost evenly over 12 months, making payments more predictable, particularly as summer becomes fall.
“People need to start think about it,” she said of the price increases. “This is a reality of New England.”