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STAMFORD — Unlike residential energy customers, who can expect their bills to increase an average of $85 beginning next month, the City of Stamford employs an advisor to help secure the lowest rates.
Still, officials appeared before the Board of Finance this week to request $595,000 more to cover the city’s energy bills.
And that’s for just one of five city energy contracts.
The increase resulted after a yearlong analysis of the energy market and bids from five suppliers, said the advisor, Larry Pignataro of Competitive Energy Services, the city’s consultant since 2019.
Market forces now are overwhelming.
In this part of the country, the dramatic increase in the price of energy is mostly about natural gas, Pignataro told the board.
“In New England, 50 percent to 70 percent of electric generation is fired by natural gas,” he said. “New England is highly dependent on natural gas.”
But the price of natural gas is dependent on world events. The Board of Finance provided a summary:
After Russia invaded Ukraine in February, European countries were among those that sent arms and supplies to support Ukraine in the ensuing war. Russian President Vladimir Putin retaliated by cutting back natural gas supplies to Europe.
In its support for Ukraine, the United States, already a major exporter of natural gas, stepped up exports to meet the demand of its European allies.
Now natural gas inventories in the U.S. are low. Storage is well below the five-year average, and U.S. production has not kept up with demand.
Then there are the problems unique to New England.
The limited number of pipelines bringing natural gas into New England do not provide the capacity to meet the region’s demand. So New England buys natural gas on the international market at very high winter prices.
And, for Stamford, there are the contracts.
Pignataro said his firm handles five account groups for the city and Board of Education. Contracts for four of the account groups were locked in at good rates – 7 cents, 8 cents or 9 cents per kilowatt hour, he said.
But the contract for the “municipal” account group, which includes the police and fire departments, expired last month. Because of market forces, electricity prices for that group will jump from 8 cents per kilowatt hour to 18 cents, Pignataro said.
It could have been worse, City Engineer Lou Casolo told the finance board.
“The goal was to beat the Eversource rate, which we did,” Casolo said.
Eversource next month will charge an average of 24 cents per kilowatt hour – twice the current rate.
That’s the charge for the supply portion of the electric bill, Pignataro reminded the board. The other portion is for delivery.
The delivery portion, which typically increases each year by 7 percent to 10 percent, is subject to approval by the state Public Utilities Regulatory Authority. Eversource then passes that cost on to its customers.
“That is not under your control,” Pignataro told the board. “But the supply charges are under your control. You can shop that out. That’s what we were hired to do for the city.”
Residential customers may shop, too.
PURA approves and licenses electricity suppliers and provides information about them online. The Office of Consumer Counsel advises customers to look out for enrollment fees and to carefully read the contract agreement before signing up with a supplier.
The supply rate changes each Jan. 1 and July 1.
According to the Office of Consumer Counsel, residential Eversource customers who use 700 kilowatt hours a month will pay an average of nearly $85 more per month beginning in January.
Eversource serves electricity customers in 149 towns and natural gas customers in 74 towns.
Monthly bills for United Illuminating customers will increase by about $83 per month, according to the Office of Consumer Counsel. UI serves 17 towns in the New Haven and Bridgeport areas.
The new supply rates will be in effect from Jan. 1 through June 30, 2023.
After that, Pignataro said, energy customers may get a little relief.
“We’re hoping prices will be in the 12 cent (per kilowatt hour) range in 2023,” he said.
The six-member Stamford finance board unanimously approved a $595,000 appropriation from the city’s contingency fund to cover the extra cost of electricity for the remainder of the fiscal year, which ends June 30.