NATIONAL GRID on Friday proposed a radically different rate structure for delivering electricity to Massachusetts customers that relies more on fixed monthly charges and less on fees based on electricity usage.
The utility, which serves 1.3 million electric customers in Massachusetts, filed a proposal on Friday with the Department of Public Utilities to increase its so-called distribution rates. Company officials said those rates have not been increased since 2009, and current revenues are no longer covering the company’s costs for operating and maintaining the poles and wires that deliver electricity to homes and businesses.
National Grid’s distribution rate consists of a flat monthly customer charge plus a rate based on how much electricity is consumed. The company currently charges a $4 monthly fee to residential customers plus a fee of 4.3 cents a kilowatt hour for the first 600 kilowatts of electricity used and 4.9 cents a kilowatt hour for consumption above 600 kilowatts. For a residential customer using 500 kilowatt hours a month, the current distribution charges add up to $25, or about a quarter of the overall electrical bill. Most of the charges on the overall bill are assessed by power suppliers who generate the electricity that is delivered to homes and businesses by National Grid
National Grid is proposing a two-step process for raising its distribution rates. In the fall of 2016, the company is proposing to raise the monthly charge for residential customers to $5.50 plus a single rate of 5.5 cents a kilowatt hour for electricity usage, which works out to a total monthly charge of $33 for the typical customer, an increase of $7.50 over the current rate.
In early 2017, the company wants to start charging 4.2 cents a kilowatt hour and a tiered monthly customer charge based on usage — $6 for those using less than 250 kilowatt hours a month, $9 for those using between 251 and 600 kilowatt hours, $15 for those using 601 to 1,200 kilowatt hours, and $20 for those using more than 1,200 kilowatt hours. For the customer using 500 kilowatt hours, the tiered rate structure would yield a charge of $30.
Company officials said the rate changes proposed for 2017 would bring in the same total amount of money as those proposed for 2016, but a greater percentage of the money with the 2017 changes would come from fixed fees.
Utilities across the country are embracing higher fixed fees – some utilities are charging a flat monthly charge of as much as $25 to all customers – as they confront a marketplace where demand for electricity is flat and may start declining as energy efficiency measures reduce consumption and more residents produce their own power with solar panels.
Environmental advocates are wary of the shift to fixed monthly charges because they fear the flat fees, as opposed to charges based on usage, will provide less incentive to consumers to conserve energy and embrace solar.
“The fees are not aligned with our broader objectives of reducing energy consumption and promoting distributed generation,” said Peter Shattuck, Massachusetts director of the Acadia Center, an environmental advocacy group. Distributed generation is industry jargon for non-power plant energy production, such as homeowners putting solar panels on their roofs or municipalities putting them on capped landfills.
National Grid officials said the company’s distribution charges are separate from the electricity supply portion of the bill, which accounts for about two-thirds of the total cost.
Electricity supply costs have been volatile the last two years, while distribution charges have not increased since 2009 at National Grid. Company officials said National Grid’s overall distribution charges need to rise $143 million, or nearly 22 percent, to cover higher costs the company is facing today. Marcy Reed, president of National Grid Massachusetts, said the company’s property taxes have doubled to $58 million over the last six years, while the cost of utility poles and transformers has increased 9 and 20 percent, respectively. She said labor and other costs have also increased.
Increasing rates is the result of unintended consequences of state and regional policies and mandates to transition to a fossil fuel free energy future. Net metering allows those lucky enough to have a house with a southerly facing roof to generate electricity for which utilities are forced to credit at the retail rate. The retail rate covers both the distribution cost (poles and wires to deliver electricity) and the generation cost (power plants that produce electricity). The result is that net metering customers are incentivized with a free ride on the grid for power that has no value. National Grid’s costs are tied to the amount of power they need to deliver 24/7 rain or shine. Solar panels on people’s roof does not reduce this cost. As more and more people take advantage of the net metering incentives, utilities need more money from the rest of us to keep things running smoothly.
People who want to compete with utilities by generating their own electricity should be forced to disconnect from the grid. That is the only way the rest of us can be fairly charged for the electricity we use.
It would appear that NortheasternEE is shill for the utilities. Perhaps he should take a look at the ~12 “Value of Solar” studies done around the nation that show that solar producers actually are adding MORE value than the net metering utilities are willing to pay. For example, and I’m sure even an Electrical Engineer can appreciate this, solar electricty I generate on my roof and use at my house has virtually no loss. If I make 100 kWh, I get 100 kWh. On the other hand, by the time the 100 kWh generated at Seabrook Nuclear Power Station reach my house, it’s down to something like 95 kWh. Believe it or not, someone pays for those lost 5 kWh.
The problem lies in the fact that utilities, like National Grid, have no way of knowing in advance whether your solar panels will generate 100 kwh, or nothing. Because you are connected to the grid, National Grid will need to purchase the 100 kwh + the calculated line losses in advance just in case it’s a cloudy day.
On a cloudy day you pay National Grid for delivering the 100 kwh to satisfy your needs. On a sunny day, National Grid cannot save the 100 kwh for another day, so the money it pays to supply you just in case is lost.
While the real operation is more complex, your solar panels increase the cost of operation to National Grid and that is why they are asking for more money.
Do us all a favor and disconnect from the grid.
If, as you requested, I disconnect from the grid, that means the utilities have fewer customers to distribute their electricity to. What will that do to prices? It will actually drive them up for everyone still connected. Oh, and by the way, those LED light bulbs you’ve switched to in your house, have the same effect. By lowering your usage, you increase what the utilities need to charge to get their state protected return on equity…. Seems you’re damned if you do and damned if you don’t. I’ll take the clean energy option thank you very much…..
Actually, Net Metering connections rob utilities of revenue that cannot be matched with any reduction in operating cost, which increases the price of electricity for the rest of us.
Your savings are at our expense. Utilities are compensated on a cost plus profit basis. Disconnecting you and others like you from the grid will reduce the cost and lower rates.
“Net Metering connections rob utilities of revenue” – so far the only people I’ve heard be concerned about utility revenue are utilities and their share holders. Thanks for revealing your alliances.
So, you favor treating victims of a robbery as villains!
Perhaps this will teach who the real villains are:
http://www.nreca.coop/wp-content/uploads/2013/07/NetMetering_WhitePaper.pdf
Here is an excerpt:
“Net metering policies require utilities to pay consumers the retail price for wholesale power. The retail rate utilities charge includes not only the marginal cost of power, but also recovers costs incurred by utilities for transmission, distribution, generating capacity, and other utility services not provided by the customer-generator.”
You do not like utilities? Just disconnect!