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Connecticut electric customers will see significantly lower rates in the beginning of 2024 than the beginning of 2023 – when a chaotic global market for natural gas drove record-high prices – but they’ll still be higher than at any other point in the last decade.
On Friday, the state’s two major electric utilities, Eversource and United Illuminating both proposed new “winter” supply rates for January through June 2024 that would increase customer bills – about 3 percent or $6.24 for the average Eversource customer using 700 kilowatts of electricity a month, and 19 percent or $19 for the average United Illuminating customer.
Electric companies pass on the cost of supply to their customers without a markup, unlike the distribution rates that they use to turn a profit. The supply rates change twice a year, on Jan. 1 and July 1. The “winter” rates that run from January through June are almost always higher because the price of natural gas – the main fuel for New England’s power plants – spikes in the winter as demand for gas for heating increases.
PURA will have to approve the new supply rates, but it’s mainly a matter of checking the companies’ math and making sure they followed the state’s rules for buying electricity for their customers.
In a press release, UI President and CEO Frank Reynolds touted how low the proposed supply rate is compared to last year, when the war in Ukraine combined with already constrained gas supply in New England to spike prices to record levels. United Illuminating customers will see their bills drop almost 20 percent – about $34 a month – compared to last winter, the company said.
“I am pleased that our customers will not face such a drastic and unprecedented price spike as what we experienced in the winter of 2023,” said Frank Reynolds, President & CEO of UI. “While this is welcome news, we continue to recognize that the electricity supply market is in desperate need of reform. The overreliance on natural gas for electricity generation will cause price increases every winter until policymakers take action.”
While the supply rate is a significant decrease from what customers saw in the first half of 2023, UI’s proposed rate of 17.06 cents per kilowatt hour is still much higher than it has been at any other point in the last 10 years.
Before this year, when the winter rate was set at 21.94 cents/kWh, the highest supply rate UI customers saw was 13.35 cents/kWh in the first half of 2015. Under the proposed rates for the first half of 2024, UI customers would pay almost $26 a month, 28 percent, more than they did in 2015.
Eversource customers, who paid 12.63 cents/kWh in the first half of 2015, would pay about $14.50 a month, 16.5 percent, more than that a month under the proposed supply rates for the first half of 2024.
Eversource’s proposed supply rate is lower than UI’s mainly because of a 1.8 cents/kWh bill credit that will give customers starting Jan. 1, 2024. The company has to offer the credit because it was able to buy power at a lower rate than it charged customers for at the beginning of 2023.
Both utilities have urged customers to look at third-party suppliers on the Energize CT rate board. Historically, third-party suppliers have cost customers more money on average than if they stayed with the standard rate provided by their utility, but that has flipped amid record high supply prices this year, and customers can save a significant amount of money by shopping suppliers now.
On Friday afternoon, there were offers on the rate board for as low as 12.26 cents/kWh for 12 months – a rate that would save the average Eversource customer $17.50 a month, and the average United Illuminating customer $33.60 a month.
Customers can cancel contracts with third-party suppliers at any time with no penalty, so it makes sense to check regularly in case there’s a better offer available.
“We always purchase energy at the best possible price available to us, but oftentimes there are third-party suppliers offering even lower rates” Eversource President of Electric Operations in Connecticut Steve Sullivan said in a press release. “These suppliers have more flexible contracts with generators – which allows them to offer more pricing options to customers.”