Electricity prices in Massachusetts, Connecticut & rest of New England to skyrocket this winter. Can solar help?

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rising electricity costsElectricity prices in Massachusetts, Connecticut and other New England states are on the rise again this winter. Utilities cite an undersupply of natural gas to the region as the problem behind the increases. But could you take matters into your own hands by turning to rooftop solar in MA to cut costs instead?

How much will electricity cost rise?

In Massachusetts, National Grid and NSTAR customers on a ‘basic service’ tariff will see the amount they pay per kilowatt-hour (kWh) increase by on average 37% from this month and 29% from January 1st, respectively. This will translate into bill increases of roughly $33 and $28 per month for average households. Similarly, prices for Connecticut Light & Power (CL&P) customers will rise by 26% from the beginning of 2015 – working out to about $17/mo in additional electricity expenditure. Investor-owned utilities like NStar and National Grid cannot not increase basic service tariffs arbitrarily, but rather must seek permission from the relevant Public Utility Commission (e.g. DPU in Massachusetts) and provide justification for any proposed changes. Common reasons include network infrastructure investment and fuel price increases – the latter of which is behind this winter’s hikes.

Fluctuating gas prices and your power bill

This is the second winter in a row that New Englanders face electricity bill increases, as homes and businesses who use gas for heating compete with power plants that use it to generate electricity. Although natural gas prices have dropped nationally in recent years, New Englanders have thus far not benefitted to the same degree as other parts of the country. Utilities blame a shortage of natural gas supply to the region – something they say could be fixed by building more pipelines.

Power plants by type in MA, CT and RI. (Click to enlarge. Source: EIA.gov)





Don



Electricity price data from the US Energy Information Administration (EIA) show that residential electricity prices in Massachusetts, Connecticut and the rest of New England spiked last winter as well, while the country as a whole experienced a much milder increase. Historic EIA gas pricing data corroborate the story that natural gas price volatility is the culprit.

Average cost of gas for electricity power

Average cost of natural gas per million BTUs in New England states vs USA as whole. (Source: EIA.gov)

Electricity rates fluctuate throughout the year and over time, due in large part to changing fuel prices. The table below shows residential electricity price trends over the past decade.

MA CT RI and New England elec prices 2004-2014

Historic residential electricity prices in New England States vs rest of US (Source: EIA.gov)

But is the solution necessarily more gas?

Utilities frame the problem as a shortage of gas. Thinking only about the short to medium-term, this may be the case. But in the longer term, natural gas prices will continue to rise due to domestic and international supply and demand. Even if multiple pipelines are built through New England, significantly higher gas prices in Europe and Japan mean that prices are unlikely to come down. The takeaway is that ratepayers are unlikely to experience relief anytime soon if they continue to rely on grid electricity.

Going solar: Moving away from fossil fuels, locking in electricity rates

So what’s a ratepayer to do? More and more people across the country are are turning to solar power to take the edge off.

Going solar will not only help you to reduce your reliance on fossil fuels such as coal and natural gas (whose recent low prices are thanks mainly to the controversial extraction method known as ‘fracking’), it will also stabilize and reduce your power bills.

Since solar panels require no fuel but the sun, the power they produce is ‘free’ to generate once the system is installed. State Net Metering policies ensure that you save money on your power bill whether you use your solar electricity yourself or sell it to the grid, and systems typically have a guaranteed lifespan of 25 years. Going solar, therefore, means over 2 decades of stable electricity prices.

Thinking about going solar? EnergySage can help.

Whether you’re thinking about purchasing a system or leasing one, EnergySage makes it easy to shop for solar. Sign up for our Solar Marketplace today to get an instant estimate and compare companies in your area.

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