Despite Hurricane Sandy, Utility Bills Are Expected to Drop Next Spring

hurricane-sandy-utility-billsWhile the infamous super storm Sandy has finally subsided, many are wondering what sort of results this will have on the utilities. A strong number of the affected population believes their utility bills are going to increase severely, but there is good news for National Grid customers. The New York utility recently announced that starting next spring, most of their customer should expect lower monthly bills. Even better, they are predicting this to last through 2016!

National Grid came to an agreement with regulators that will lower electricity and natural gas delivery rates. This plan still needs to be approved by the state Public Service Commission, but the utility plans to slowly increase its revenue from upstate electric customers by $123 million during the next three years. Now this may not seem very beneficial to customers, but since a sizable surcharge will expire at the same time, it is calculated that the net effect will be lower delivery rates.

Delivery rates refer to the price customers are charged for getting electricity to their homes or businesses, which accounts for one half of their bill. The other half is the cost of the electricity itself, also known as the supply. Supply rates are determined by the wholesale electric market and utilities do not have the ability to mark up these prices. Given that the price of electricity remains constant, electric bills will fall. In fact, due to inexpensive natural gas, wholesale electric rates have generally decreased over the past few years.

Specific bill examples are not available at this point since the plan may still go through a few minor changes. Steve Brady, spokesman for National Grid, stated that most residential customers saw their electric delivery rates drop by 11 percent back in January, and this proposal will continue the trend. It is possible that gas bills may also fall a bit next year as the proposal requires National Grid to drop gas delivery rates by $3.29 million during the first year. In the second and third years, they will go back up by $12 million but the net effect should be steady gas bills, since certain gas surcharges will expire by then.

As mentioned earlier, most people affected by Hurricane Sandy are anticipating their energy bills to increase considerably. This may be true for some, but the majority of customers at National Grid should not be concerned. With the predicted reduction in electric and natural gas delivery rates, these customers should be in the clear.

Sarah Battaglia
Energy Curtailment Specialists, Inc.

Sarah can be found on LinkedIn and Google+.

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