How to prepare your house for winter
James Hecker of Hudson Valley Household and Jesse Dorazio of Royal Comfort share tips for winterizing your home (August 19, 2024).
WARWICK – Most Rhode Islanders will see their electric bills rise 22.8% in the coming weeks, reflecting the now-normal increase in electricity prices during New England’s cold months.
The state Public Utilities Commission on Thursday approved Rhode Island Energy’s new pricing proposal that would increase residential electricity prices to 16.4 cents per kilowatt-hour for the period Oct. 1 through March 31. That’s a big jump from the current price of 10.4 cents per kilowatt-hour, which went into effect April 1.
Although the tariff is lower in direct comparison with the last two winters, it is still much higher than winter tariffs in any other year over the past two decades and is due to higher demand for natural gas as a result of cooler weather.
For the average residential customer who uses 500 kWh per month, the average monthly bill would increase by $31.30 to $168.84. While that’s more than current bills, it’s still about $8 less than last winter.
Billing changes, energy prices, etc.: Questions and answers with the new president of Rhode Island Energy
Customers will also feel the impact of a refund
The change only affects customers who use the so-called last resort service. This means that Rhode Island Energy not only supplies them with electricity, but also purchases it for them on the wholesale market. About three-quarters of Rhode Island Energy’s residential customers use this service.
The rest are people in cities and towns that buy their electricity from a third-party provider through what’s called power aggregation. These communities are Narragansett, Newport, Portsmouth, South Kingstown, Barrington, Central Falls and Providence. Their winter rates don’t usually change until November 1st.
Last Resort Service customers will receive compensation for overpayments in the form of a refund from Rhode Island Energy in 2023. The company had overbilled its customers by more than $27 million because actual energy prices on the spot market last year were lower than originally forecast.
Most customers will receive a one-time refund of $68.60 in December. For low-income customers who qualify for a reduced rate, the refund will be spread over six monthly payments of $23.47 between November and April, for a total of about $140. This effectively offsets the impact of the rate increase on the bill.
“We share concerns about high energy prices – caused primarily by geopolitical events around the world and supply and demand. It’s important to note that we charge our customers the same as we pay generators to produce electricity, and we do not make a profit on the cost of electricity,” said Caroline Pretyman, Rhode Island Energy’s director of communications. “We are pleased that the bill credits will help mitigate some of the price increase for the average residential customer and all of the price increase for low-income customers this coming winter.”
Natural gas prices drive up electricity prices in the region
Electricity prices in New England’s regional power grid are largely determined by wholesale prices for natural gas, a major fuel for power generation and heating.
Market prices fall in the summer when demand for gas falls, and rise in the winter when homes and businesses need the fuel for heating. Due to bottlenecks in the region’s gas pipeline network, prices have tended to skyrocket as temperatures drop over the past decade.
Price swings were more dramatic than usual two winters ago as the war in Ukraine and inflation drove up global demand for gas. Rhode Islanders saw smaller price increases than customers in Massachusetts and other states in the region because Rhode Island Energy’s law requires it to spread its energy purchases over a year and a half.
However, Rhode Island’s residential electricity rate still reached 17.8 cents per kilowatt hour, the highest ever recorded in the state.
More: Do you have questions about the new smart meters in Rhode Island? Here’s everything you need to know.
Wholesale prices have fallen, but Rhode Islanders are not yet feeling the full impact
Although wholesale prices fell, prices did not follow a linear trend due to the tiered procurement policy. For example, last winter’s tariff was still very high at 17.7 cents per kilowatt hour.
And customers will still feel some of the impact this winter, as some electricity supplies were already purchased in January 2023.
“Natural gas prices have come down sharply, but transportation costs are still high, especially in January and February,” said Jonathan Bausch, senior energy procurement specialist at Rhode Island Energy parent company PPL Corp., at a PUC hearing on the electricity rate proposal earlier this week.
Rhode Island Energy has so far purchased 35 percent of the electricity for the coming winter. The company expects prices to fall, but not significantly. The tariff for private households would be 15.9 cents per kilowatt hour in the winter of 2025/26, according to the company’s calculations.
