G&E boasts lowest electric rates in region, low natural gas rates
January 10, 2013
By MATTHEW FERREIRA Special Writer
MIDDLEBORO — Middleboro and Lakeville ratepayers are currently experiencing the full benefit of being customers of their municipal utility company, Middleboro Gas & Electric Department, with low natural gas rates and the lowest current electric rates in Southeastern Massachusetts, according to the G&E manager .
MG&E General Manager Jackie Crowley credits a combination of ideal conditions, effective planning, and a business model that puts the customer first for the company's ability to provide its current rates.
"We're at a time right now when natural gas prices have come down dramatically from the highs we saw in 2008 when rates went as high as $13 a decatherm and now they've gone under 3.00 this past summer and that's partly because of all the shale exploration," said Ms. Crowley, who is also the department's energy analyst. "Natural gas has always been a really dominant piece of the power prices in this region which has been painful in some years when natural gas prices were high but in a year like 2012 when natural gas prices were low we get a really great benefit from that so that's part of the reason why our rates have been lower than they have been in other years. We're able to reflect the price of our power and our natural gas."
Another factor that has contributed to the current market conditions was the unprecedented climate of last year's winter season.
"We're coming off of one of the warmest winters ever in this region's history so there's a lot of abundant supply left in storage that wasn't needed and that really had a big impact," Ms. Crowley said. "We came out of this winter with a big surplus of supply and in fact in some cases there was some pressure to move it because you have trouble with storage capacity towards the end of the summer season when the storages are pretty much full in anticipation for the winter. When you have no place to put it the prices will be driven down."
While the company has reaped the benefits of these uncontrolled conditions and in turn passed those benefits along to ratepayers, the G&E has also taken steps that resulted in a number of rate increases over the past two years. Some of the action was taken in response to criticism from residents who have since been elected to the utlity's board of commissioners. The new commission appointed Ms. Crowley as interim manager after parting company with former manager John Granahan last year.
"We have a rate stabilization account that was established about six or seven years ago now," Ms. Crowley said. "A lot of municipal light plants have this. It's basically a way where if we have a year where we have good balance between our sale prices and our supply costs we can take any excess and put it away so that in the future if costs rise we can absorb the increase without it effecting our customers and our rates remain as stable as possible.
"Some companies change their rates every month or every quarter," the manager said. "We try to keep our rates at the same level for extended periods of time because what we've heard from our customers is that they appreciate predictability in their bills."
Ms. Crowley said adjustments were made to the rate stabilization account in part due to economic conditions over the past several years.
"The rate stabilization account was hit very hard in 2008 when we saw these really serious energy price spikes hit "¦ so we drained that account very rapidly. The general manager at the time, out of concern, had raised rates at that point which let us replenish the account. Then when the prices started to come back down we continued to collect to rebuild the account to the point where after some time it was actually larger than it should have been," Ms. Crowley says. "Now we're getting that account back to where it should be — we had 5 or 6 rate reductions this year on the electric side and at least two on the gas side, so we brought our rates down to give our customers back some of that money that had been put into the rate stabilization account ... We are essentially giving back to the rate payers 4-6 million dollars over a two-year period that started near the beginning of 2012 and that's helping us to keep our rates down now."
The other part of MG&E's effective planning comes in the form of frequent and scrutinizing analysis of the energy markets, evaluating past years' numbers as well as projecting into the future, Ms. Crowley said.
"We try to kind of take a budget approach and think 'how is this going to hit our customers' and the two things they'll always need are reliability and competitive pricing with predictability. Nobody wants surprises when opening up their energy bill," she said. "Besides our regular daily monitoring and monthly analysis we also do a special analysis seasonally when we know that we're going to be hit with some heavier costs. We'll look at the season to come and look at the traded commodity rates to project out what our future power and gas costs are going to be and then we'll do an analysis to make sure that we're covering all of our anticipated costs. We have costs that we build in for depreciation, costs to maintain the plant making sure our pipes and wires are being tended to and then we'll determine where the rates need to be from there."
With last month's reports reflecting rates of 10.8 cents per kilowatt hour for electric and $1.17 per CCF, Ms. Crowley reports that the municipal utility company is continuing to do everything within its abilities to provide the greatest value possible for its rate payers.
"It's likely that starting this spring or summer we'll be evaluating the rates for the remainder of 2013 through the end of 2014 and figuring out where we need to be to make sure we're recovering our costs. The goal would be to keep them where they are or to lower them even further if it's possible but that's very much driven by the energy market."
The final factor that can be considered in the MG&E's presently low utility rates is the fact that it is town-owned and operated, managing to stay clear of the politics and investor-driven issues that sometimes precede the interests of rate payers in the case of bigger companies.
"We have a reliability mandate; profit is not our goal at all. We are here to provide essential services to the people of Middleboro and Lakeville and because we're town owned we don't have investors who are looking for a return. That's why we are able to be more competitive pricing-wise than an investor owned utility. Our top priority will always be to provide reliable essential services for our customers at the most competitive price possible," Ms. Crowley says. "(Also), a lot of our employees are residents of the towns in our service area and so they have a real interest in making sure that their neighbors' needs are met. For example in a recovery effort we tend to be able to act pretty quickly because there's a local familiarity. ... People can just say 'that's a part our system that's presented issues and this is what works to fix it'. So in the end we can be pretty effective with fewer people."