August 10, 2022

50signs

The Fashion Spirit

NH advocates point to policy actions in the face of rising energy costs

6 min read

(Photo by Amanda Gokee/New Hampshire Bulletin)

Electric rates for two of the state’s largest utilities are set to double, driven by the high cost of natural gas.

Both would be around 22 cents per kilowatt hour – about a 50 percent increase in electric bills for a typical household that would pay around 70 extra dollars per month. Liberty’s proposal was approved by the Public Utilities Commission last week, and the regulatory body is expected to approve Eversource’s soon.

It’s the most significant increase in almost three (decades, Consumer Advocate Don Kreis said. And it’s been met with a flurry of political finger-pointing.

The state isn’t in a position to lower the cost of natural gas, but ratepayer and clean energy advocates say there are policies that could keep costs down. And there are steps individuals can take to manage energy costs at home.

The region depends on natural gas for both heating and powering homes, and some energy experts say New England’s energy mix puts the region in a particularly costly position, when natural gas is expensive and not readily available.

Republicans, including Gov. Chris Sununu, have blamed Democrats in Washington for trying to transition away from fossil fuels too fast. They argue that has driven up the price of natural gas, discouraging fossil fuel companies from increasing production and investing in new pipelines.

Democrats, in turn, have blamed Republicans for blocking renewable energy projects that would diversify New Hampshire’s fuel supply and, they say, provide lower cost alternatives.

Last week, Sununu announced a $60 million program to send one-time payments of $100 to ratepayers to blunt the impact of the rate increase.

How did this happen?

When there’s not enough pipeline gas to meet demand, the region supplements with more costly liquefied natural gas.

“We are using a more expensive fuel for generation than most other regions of the country,” said Chris Skoglund, the director of energy transition at Clean Energy New Hampshire. “That means that we are uniquely exposed to a global market and global prices,” he said.

At times, nearly half of New England’s energy generation comes from natural gas. The region started expanding its gas generators in the early 2000s, during the fracking boom, when natural gas was a cheap source of energy.

“As the price went down, there was a general thought that that would keep electricity prices lower in the unregulated market,” Skoglund said.

But for now those lower prices have evaporated. In the early 2000s, natural gas cost on average around $3.50 per unit. As recently as 2020, it cost only around $2. But in 2022, it reached a high of $9.44, with some projections saying it could hit $30.

“We have been lulled into complacency as a state and a region over the last decade or so by historically low prices for natural gas,” Kreis said.

That’s changed. Covid-19 has impacted global supply chains and continues to drive up prices. Sanctions against Russia that followed its invasion of Ukraine are doing the same, as the U.S. exports more of its supply.

“The worldwide demand for what we can produce here in the United States is accounting, I think, for the increases that we’re living with,” Kreis said.

Skoglund said the price of natural gas is unlikely to come down any time soon because even if the war ends, sanctions against Russia may remain.

“A significant amount of this price fight has nothing to do with U.S. policy or even New England energy and climate policy,” he said. “It’s just really poor timing, as we are in the middle of the energy transition and do not have adequate renewable and flexible demand renewable generation to be able to avoid these price spikes.”

Policy to bring down prices

Some advocates hope the extreme rates could spur the state to action.

“There’s a whole pile of things we could do,” Kreis said. That could include charging batteries overnight when electricity is cheap and using less energy during the daytime when it’s expensive; implementing cheaper rates for electricity at night to spread out demand for energy; and doubling or tripling down on energy-efficiency efforts.

But, he warned, “there’s no magic bullet.”

The state could consider changing how public utilities buy energy. Right now, they go to the market twice a year. “Essentially they choose the lowest bidder and sign a contract that lasts for six months and that’s all they do,” Kreis said.

Eversource spokesperson William Hinkle said its electric rates in Massachusetts and Connecticut are lower than New Hampshire because it went to market a month earlier in those states.

“It’s not like we are just able to decide in a vacuum, today we are going to propose a higher cost in New Hampshire than in Massachusetts,” Hinkle said. “This is the best price offered on current market conditions. The difference in price is the difference in those market conditions.”

If the market is high when they’re buying, that expense is passed along to ratepayers. But there are other models by which utilities purchase energy – like the one used by the New Hampshire Electric Co-op, which is member-owned, not investor owned.

“The co-op is much more active in the wholesale market, all the time trying to get good deals for its members,” Kreis said.

That paid off for its members last year, when Unitil’s rates increased 60 percent (also driven by the high cost of natural gas), and the co-op’s increase was just 17 percent.

Community power

Community power projects, where cities and towns buy their own power, would take a similar approach – one they argue would help keep electric prices down for customers. But they can’t move forward until the rules that will govern these projects are approved by the utilities commission.

Proponents say community power would allow participants to secure competitive prices for electricity and give them greater flexibility if a town or city wants to prioritize renewable energy.

“The rate shock we’re seeing coming from the regulated utilities right now is some of the most intense rate shock we’ve seen perhaps ever. And community power is absolutely a way to better control costs and better manage costs for customers,” said Henry Herndon, an energy consultant who is affiliated with the Community Power Coalition, a group of 19 communities throughout the state pursuing this option.

Herndon said the coalition procures a diverse portfolio or power contracts, and has the flexibility to buy when market conditions are favorable. That translates into lower prices for customers, he said.

“It just so happens that Eversource and Liberty are required to go to market at the absolute peak right now, and that’s why we’re seeing this rate shock,” he said.

But community power programs can’t start operating until the utilities commission finishes writing the rules governing the process. It is scheduled to propose those rules July 5. They would then need approval from the state Joint Legislative Committee on Administrative Rules. A final draft could be ready by August, and the commission could start approving plans as early as late this summer.

The utilities commission recently rejected a community power plan proposed by Keene, indicating it will not approve plans until the rules are finalized. That means it wouldn’t be until April or May of 2023 that programs could launch.

“That’s probably the earliest we can see customers get rate relief through community power,” Herndon said.

What to do at home

Advocates are also encouraging residents to take matters into their own hands immediately by checking if they can purchase energy for less than the rate offered by utilities. People aren’t required to purchase electricity from the utility that serves them. Instead, they can look at third-party competitors that may offer less expensive rates.

This advice comes with a caveat: read the fine print carefully. These suppliers may lock customers into longer-term contracts, a risk if the utility price goes back down.

The utilities commission has an online tool to help people shop for electric rates, as well as a list of energy suppliers. Contact your utility if you would like to switch to a competitive supplier.

Skoglund advises people to conserve energy as much as they can. Using less electricity is the easiest way to save money on your monthly bill. Turn the lights off when you leave the room. Turn the thermostat up in the summer or down in the winter when you leave the house.

Energy-efficiency measures, like air sealing a house, can also help to save money.

Skoglund said he puts plastic over the windows of his family’s home to create an additional air barrier, a measure that he estimates could save between 20 and 30 percent on the winter heating bill.

It doesn’t look pretty, he said, but it saves money.

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