Summer typically means lower supply rates for electric customers in Connecticut as high demand for natural gas over the winter subsides, and electric companies seasonally adjust their rates on July 1 to match the lower price.
But in an unusual move driven by the constrained global market for natural gas, Connecticut’s largest electric supplier said that they will be raising — not lowering — rates this summer.
But even without the increase, seasonally-adjusted rates are often little comfort to electric customers who tend to use more power during the hot summer months.
Eversource will charge a 3.9 percent increase in the standard supply rate on July 1 to 12.05 cents per kilowatt hour – equal to about $4 more per month for the typical residential customer using 700 kilowatt-hours of electricity, which would bring a monthly bill to about $187.28, according to the company.
United Illuminating will drop the standard supply rate for residential customers, from the winter rate of 10.67 cents per kilowatt hour down to 10.62 cents per kWh – a savings of about 35 cents a month for the average customer.
The options aren’t better from third-party suppliers at the moment. On Tuesday, the lowest offers on the Energize CT rate board would cost an extra $7 a month for Eversource customers and an extra $15.53 a month for United Illuminating customers.
In a filing with utility regulators, Eversource said the unusual summer supply rate increase was a result of the price of natural gas, and its impact on the wholesale price of electricity in New England. Natural gas-fired plants provide about half of the region’s power.
Natural gas is typically cheaper in the warmer months, when there is less demand for it as a source of heating fuel, but the Russian invasion of Ukraine has upended the global gas market – driving up prices as the supply of gas from Russia is constrained, and as the U.S. increases exports to backfill demand in Europe.
The price of natural gas this April was two-and-a-half times more expensive than at the same time last year, and this summer’s prices are projected to be more than double what they were last summer across the country, according to the U.S. Energy Information Administration.
In New England, that could lead to the wholesale price of electricity increasing about 167 percent over last summer, according to the EIA.
Eversource said the rates would have been even higher without its “laddering” approach to buying power – where the company buys portions of its future supply at different times, which allowed it to lock in lower prices than the current market prices.
The company said it does not make any profit off of the supply of electricity, it just passes on the market price that it paid – “no more, no less,” Eversource said.
The unusual summer supply rate increase comes as Connecticut residents are already squeezed by inflation and by the high electric rates they have already been paying since January 2 – when Eversource and United Illuminating both significantly increased their rates to adust to the rising price of natural gas.
Nationwide, residential electric customers saw the second-largest spike in energy costs in the last decade, with the average bill increasing by $5 a month or 4.5 percent between 2020 and 2021. And the situation looks worse in 2022, as the average bill increased 9.8 percent between January 2021 and January 2022, according to the most recent data from the Energy Information Administration.
In February, Connecticut residential electric customers used an average of about 720 kilowatt hours – about 4 percent less than the 750 kwh they used on average in 2021. Those same customers spent $20 more on their February bill on average, according to the EIA.
They paid about $20 more in January 2022 than in January 2021, as well – in line with what Eversource predicted the January rate increase would cause. It was expected, but the increase still outpaced inflation, as customers spent 12 percent more in February than they did the year before.
Connecticut wasn’t alone in paying high bills this summer, and the price of electricity this February was higher than last February for every region of the country that didn’t see abnormally high prices as a result of the winter storm that roiled the electric grids in Texas and the midwest last winter.
New England especially was hit hard this winter – with customers in the region seeing an average bill increase of $20. Customers in Maine saw the largest increase in the country, paying about $38 more this February than last February, according to the EIA.
But even with that increase, Maine customers still spent an average of about $40 less per month than Connecticut customers – who paid about $190 on their February bill on average. Those were the highest electric bills in the U.S., with customers petroleum-dependent Hawaii paying an average of $167 a month for the second-highest bills in the country.