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EverSource CT & United Illuminating Electric Summary
According to the U.S. Department of Energy, there will be a significant rise in electricity prices and other energy prices this winter due to increased demand for natural gases. Natural gas is the most popular fuel source for heating homes as well as generating power.
The Energy Information Administration of the Agency predicts that Americans will have to pay 10 percent more this winter for electricity. The prices for home heating oil are expected to rise 27 percent this winter, compared to last year's heating seasons. Meanwhile, the cost of natural gas to heat homes is expected to be 28 percent more than last year.
Gage Frank, a spokesperson for The United Illuminating Co., and its sister natural gas utilities, in Connecticut, stated that "natural gas prices in the northeast have risen substantially and have caused the price for electricity supply and natural gas used for heating to rise as well."
Frank stated that utilities were still analyzing forecasts for electric and natural gas prices in order to estimate the rise in costs-unrelated to the utility portion of the bill but not under their control-for next winter. He was referring to UI, Southern Connecticut Gas, and Connecticut Natural Gas.
Eversource Energy spokesperson Mitch Gross said that company officials won't know the price of electric supply for the first half 2023 until later in the year. Typically, it is sometime in November. The electric rates in Connecticut are adjusted twice per year on January 1st and July 1.
Gross stated that Eversource does not make a profit from the price of electricity. "We charge customers only what we pay generators to produce the power.
Gross and Frank both encouraged consumers to use payment plans offered by the companies if they can't afford higher energy prices.
Most Connecticut residential customers receive their electricity through the standard service offer. Standard service allows customers to allow the utility to purchase the electricity they need, rather than having to contract with a third-party provider.
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Eversource standard customers paid 11.48c per kilowatt for the first six months, while UI customers paid 10.63c per kilowatt. Average customers of both electric utilities use 700 kilowatts per month of electricity.
The state's Public Utilities Regulatory Authority regulates the setting of standard service rates. A procurement manager solicits competitive bids from suppliers and generators on a quarterly basis. Eversource and UI participate in the procurement process along with Connecticut's Office of Consumer Counsel which represents ratepayers.
The procurement process is intended to ensure that consumers pay the lowest market-based electricity supply rates.
ISO-New England manages New England's electricity markets. A spokesperson for ISO-New England Matthew Kakley stated that "at the wholesale level we have definitely seen higher prices in the recent months."Kakley stated that wholesale electricity prices tend to follow natural gas prices. Therefore, we expect wholesale prices will remain high as long as natural gas prices rise. "Most utilities will procure electricity for their customers in advance. However, these contracts are usually informed by the expected wholesale market prices."
Natural gas prices are being driven by a variety of factors. The demand for natural gas is high despite the fact that the United States has a record-breaking production.
In part, the U.S. is importing record amounts of natural gas to assist European allies in coping with cuts to fuel imports from Russia to countries that support Ukrainian independence. According to the federal Energy Information Administration, more than a third of the electricity produced in America comes from power plants that use natural gas.
Natural gas is used to heat almost all of these homes. Connecticut has a lower market share, with only 36.3 percent of homes being heated by natural gas.
Katie Dykes, the commissioner of the state's Department of Energy and Environmental Protection said that Gov. Ned Lamont took steps to ease the financial burden of rising energy and electric costs.
Dykes stated that the state's extensive and award-winning energy programs were designed to save consumers money during this crisis. "Energy efficiency forms the heart of the Lamont Administration’s strategy to provide relief for families and reduce emissions from the electric sector. Governor Lamont stopped the practice of using efficiency funds to repair state budget holes. The energy efficiency programs are now well-positioned to meet the increased demand.
She said that the steps Lamont's administration took to ensure Dominion Energy's Millstone nuclear plant in Waterford was operational in 2019 are also paying dividends.
Dykes stated that between January and April, Millstone's contract generated $128 million in net profits for Connecticut ratepayers. The rate payers received those earnings starting September 1 and the average Eversource or UI customer saw a lower bill of $9.78 per monthly and $7.72 respectively.
This is why the average rates for Eversource and UI customers in Connecticut are slightly lower than those of customers of other New England utilities.
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