Note: bold by MAMEC
Unitil reduces residential rate
Sentinel & Enterprise
By Michael Hartwell firstname.lastname@example.org @sehartwell on Twitter
FITCHBURG -- Unitil ushered in a reduced electricity rate on Friday, slicing about 10 percent off each residential customer's bill. Unitil officials said the savings are the result of falling natural gas prices.
Last month National Grid customers had their rates reduced for the same reason. For a customer who uses 650 kilowatt hours each month, the standard suggested by the state, National Grid residential customers average bill fell from $93.56 to $83.50 a month. For most Unitil residential customers using the same amount, the bill will fall from $129.58 to $116.38 a month.
Unitil spokesman Alec O'Meara said that's down 4.9 percent from last June for the total bill.
Brian Murphy, president of Colonial Power Group which performs municipal aggregation work for Lunenburg, said the savings is bringing his company's price down to 5.85 cents per kilowatt hour, the lowest electric cost in the state. He said the cheap electricity is available because of hydraulic fracturing, a process that uses water pressure deep in the earth to break apart rocks and releases trapped natural gas. The use of hydraulic fracturing, or "fracking," has lead to a large increase in natural gas supplies.
Murphy said less than five years ago, natural gas was used to create about a third of the electricity in New England. Now that number is around half.
Hydraulic fracturing has received criticism from some environmental groups that believe, among other things, it can contaminate the water supply with methane.
Kevin Kelly, manager of Groton Electric Light, a municipal-owned utility company, said cheap electricity from natural gas may not be a passing fad.
"If the politicians and the (Environmental Protection Agency) don't put huge regulations and huge hurdles in the way. It could stay at this level for five to 10 years," said Kelly.
Kelly said as a municipal-owned utility, his company has previously invested directly in power-generating plants, such as several nuclear power plants and the Berkshire Wind Power Cooperative. The private utilities are only able to make contracts that lock in a price for six months, while public utilities can agree to prices for years at a time. About half of the town's electricity comes from natural gas, but their long-term contracts force him to continue charging higher rates for the electricity itself and there will not be rate reductions in the near future.
However, Kelly said his Groton Electric Light customers still pay less overall, with a bill of $78.68 for 650 kilowatt hours, as the power cost is only a portion of the bill.
"They have an advantage to buying everything at market cost right now because the market is so low," said Kelly. He said his utility has a diversified portfolio with a long-term outlook, and it's impossible to predict which electricity source will be the cheapest.
"The world was very different five years ago," said Kelly. He said there was no way to know back then what would happen to natural gas prices.
Marcia Blomberg, spokesperson for ISO New England, the company that oversees electrical transmission in New England, said natural gas has been growing year over year in New England. Last year it produced 52 percent of electricity in the six-state area.
She said she doesn't have the ability to predict what role natural gas will play in the future, but for now, it's a big player.
O'Meara said the changes in electricity cost is responsible for the bulk of the cost decrease. In addition to that, there will be a reduction of about one tenth of a cent for each kilowatt hour through a reconciliation factor. Each year the company makes a prediction to the Department of Public Utilities about how much electricity will be used, and that amount is factored into the rate. This year the estimate was low and the small adjustment reflects the larger electricity consumption by customers.