The cost of a kilowatt hour will jump 26 percent for Connecticut Light & Power’s residential customers starting next year.
The unwelcome spike in electricity generation prices is a direct result of bottlenecks in natural gas pipelines. And although it’s little consolation, prices are jumping throughout New England.
Default generation rates, which are developed by CL&P and state officials, will be 12.629 cents per kilowatt hour from Jan. 1 to June 30 for residential customers, up from 9.99 cents per kilowatt hour in the last six months of 2014.
The generation rates pay for the production of electricity at power plants and make up about half of residents’ monthly bills. Another major portion of the bill, distribution rates, are also under regulatory review and are expected to increase early next year for CL&P customers.
The spike in generation prices will mean an increase of more than $18 a month for a typical customer who uses 700 kilowatt hours. The distribution increase, as proposed by CL&P to also take effect early next year, would increase rates nearly $10 more for the same customer.
Natural gas is cheap, and now more than half of New England’s power plants use the fuel. Although all that power from newly inexpensive natural gas should result in lower electricity costs, there is a major problem getting the fuel into the region.
For the past two winters, as homes and businesses use up more and more of the three pipelines feeding New England, there was not enough room for power plants to get their gas, and what little room was left was expensive. Some natural gas plants were unable to get fuel to run, so older and more expensive oil plants were called on to run.
Magnifying the problem, a few large non-gas power plants shut down this year, including the Vermont Yankee nuclear plant and the Salem Harbor coal plant, leaving the region with fewer alternatives to the crowded pipelines, said Dan Dolan, president of the New England Power Generators Association, a power plant industry group.
“It put further strain on a natural gas supply infrastructure that is already tight,” Dolan said.
The resulting jump in electricity prices for residents and businesses has been a long time coming. There are half a dozen plans to build or expand pipelines in the region, but they are years off. The worry about over-reliance on natural gas been raised before by numerous officials, including Gordon van Welie, the chief executive of ISO New England, which runs the region’s power grid and electricity markets.
“The lack of pipeline infrastructure has raised fuel adequacy for natural gas generators to the top of the list of pressing concerns for New England’s power system,” he said. “ISO New England has made changes to the wholesale power markets and to operating procedures to help address this concern, but to keep the region’s power grid reliable and flexible, a commitment to investing in fuel adequacy is needed from all New England stakeholders.”
For the second year in a row, ISO New England is running a program to keep power plants running this winter. It will pay for power plants to stockpile and run on oil, if they can, and also provide incentives for natural gas plants to buy a liquefied version of the fuel ahead of expected pipeline constraints.
CL&P bought power from four electric companies for the first half of next year: Energy America, Exelon Generation Co., NextEra Power Energy Marketing and PSEG Energy Resources & Trade.
To ease the increase, the power company on Friday urged customers to conserve energy.
“We’re always mindful of the effect these supplier increases have on our customers, particularly those who are facing difficult financial circumstances,” said Penni Conner, chief customer officer at Northeast Utilities, the parent company of CL&P. “We’re urging all CL&P customers to take advantage of our efficiency programs to help reduce their usage, tighten-up their homes and keep energy bills down this winter.”
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