Massachusetts electricity ratepayers could soon see their electricity bills shrink as the lowest natural gas prices in over ten years make it cheaper to produce power.
Nearly 60 percent of the state’s electricity is generated by gas-fired power plants, and utilities – which have been paying less to buy that power – are passing the savings on to consumers.
NStar, now a subsidiary of Northeast Utilities of Boston and Hartford, asked state regulators on Monday to approve a nearly 16 percent cut in power rates for its 1.1 million electricity customers. That would bring the charge to its lowest in eight years.
Last week, National Grid, the state’s second largest utility, lowered its electricity supply charge by nearly 19 percent.
Both Nstar and National Grid typically provide prices for a period of six months for fixed price customers (NStar: Jan to June and then July – Dec. National Grid: May – October and November – April). Industrial customer basic service prices are fixed for only three months.
The fixed prices that utilities contract with suppliers are based on auctions prior to the start date of the new fixed prices, in the same way that you, the commercial customer, contracts electricity. When the utility fixed price offer expires, the new price will be based on market conditions at that time, which we forecast will be higher, since natural gas prices have come off of their lows. Our recommendation is to contract for an eighteen month period at present, even if that price is slightly higher than what the utility standard offer is. While the initial price might be higher, you will save when the present basic service price period ends, having locked in a fixed price for a longer period. Averaging those savings against the short-term price difference will protect you from price increases and control your energy budget. Contact us for more information about controlling your electricity costs.