Why Are Electric Prices So High in New England?
Different energy prices across USA
If your electricity is supplied by EverSource, National Grid, Unitil, Liberty, and Central Maine Power, your electric bills doubled/tripled over the last three months.
The 2022 Utility and third-party electric supply rates in New England will average over $0.20/kWh up 100% from 2021 which was $0.10. It is interesting to note that the average electric rate in the rest of the country is 50% less except for Alaska, California, and Hawaii which along with the Northeast have the dubious distinction of having the highest electric rates. The diagram below from the US Energy Information Administration shows the 2021 average by the state which includes distribution and supply.
Why do natural gas prices affect electricity prices?
We have reported over the last year the impending increase in electricity and natural gas prices for 2022 because of the rise of natural gas. But wait a minute… why do natural gas prices affect electric rates? Although 39% of the generation uses gas across the United States, New England’s share is over 60%! Therefore, so goes gas…so goes electric rates.
Why is New England different?
New England relies heavily on natural gas for their power generation, and our infrastructure (pipeline) cannot support the increasing demand, especially during the winter. As a result, we see those bubble cargo ships docking at the Everett Liquefied natural gas Terminal where we compete on the world stage for our natural gas supplies.
What to expect for the upcoming years?
Although it is difficult to predict if the high electricity rates will continue because of weather and geopolitical events, our expectation is that the electric supply rates in New England will average $0.18 cents per kilowatt hour through 2025. The forecast is based on natural gas supply constraints caused by the transition of the European Union’s dependence on Russian natural gas. That coupled with the uncertain outcome of the conflict in Ukraine is keeping natural gas prices higher, especially in New England. We can expect natural gas prices & electricity prices to remain high over the next couple of seasons.
How to mitigate the higher energy prices?
Reducing electric consumption is a popular cost-saving initiative by leveraging energy efficiency technologies such as using LED lights, variable motors, timers, and insulation. Neighborhood Energy offers programs such as Energy Demand Response that pay consumers to reduce usage during peak hours along with third-party electric and natural gas supply that allow buyers to take advantage of the forward market that has lower energy rates.
Third-party electric agreements
Over the years we have found one of the most effective ways of reducing your energy costs is through fixed-rate third-party agreements. Given the current volatility in the energy markets, higher prices, and forecasts - our customers are actively enrolling with 24, 36 & 48-month terms with electric prices up to 50% lower than the New England Utility rates.
Do you have accounts still being served by the utility? Get in touch today and we can go through the different ways we can reduce your energy costs. Let us help you secure budget certainty in an uncertain environment.