*If you live in Rhode Island read the People's Power & Light version of this article here.

You’ve been good enough to voluntarily sign up for one of Mass Energy’s green power products, New England Wind or New England GreenStart (if not, click here to learn how). By now, you have probably read or heard that electricity rates for customers of National Grid, NSTAR, and Western Mass Electric are all taking a big jump this winter. These rates will be in effect until the spring. At that point, we expect the rates to come back down. Below is some information on the electricity rate increases and Mass Energy’s response. 

The utilities buy electricity according to rules set by the Department of Public Utilities (DPU). Because this winter’s spike is so significant, the DPU has asked stakeholders for ideas on how to mitigate the rate increase and how to minimize its effects on consumers. Here’s what we had to say...

Mass Energy advocates for policies that are pro-consumer and pro-environment.

National Grid buys electricity according to rules set by the Department of Public Utilities (DPU).  Mass Energy has no control over what National Grid’s rates are, but we do monitor them closely and take every opportunity possible to influence the process through advocacy. Because this winter’s spike is so significant the DPU is examining the increase and has asked stakeholders for ideas about how to mitigate the rate increase and how to minimize its effects on consumers. In response, Mass Energy made joint comments with a large group of environmental organizations[1] and consulted with the National Consumer Law Center and the Low Income Energy Assistance Network.

The DPU should order National Grid to increase its commitment to energy efficiency because it has been extremely well documented that the Mass Save program saves electricity, gas, and oil at costs that are much less than buying the electricity supply.  We all pay a small charge on our electricity bill for Mass Save.  Yet, if you look at your electric bill, you will see that we are only spending roughly one penny per kilowatt hour for energy efficiency (the funding source for Mass Save). The rest is spent on getting the supply to our homes. On my most recent bill, I paid just $5.78 for energy efficiency out of a total bill of $114.65[2].

Additionally, as Executive Director of Mass Energy, I represent Massachusetts Non-Profits on the state’s Energy Efficiency Advisory Council (EEAC). I have been and will continue to push the utilities towards greater energy savings.

Energy efficiency is cheaper than supply.

The utilities are able to save electricity in the Commercial and Industrial sector at a cost of about 3 cents per kilowatt hour. That’s far less than the cost of electricity generated from natural gas this winter. We all pay a small charge on our electric bill for Mass Save, but we are only spending roughly one penny per kilowatt hour for energy efficiency (the funding source for Mass Save). The rest, about 95%, is spent on getting the supply to our homes.  These facts beg the question, why buy expensive natural gas to serve customers when you can spend a lot less and create a lot more jobs by installing LED light bulbs in homes and offices? This is proof Massachusetts is not investing enough in what makes the most sense!

Protect low-income people, especially those with electric heat, by increasing fuel assistance. 

Renewable energy is cheaper than natural gas this winter.

The reason that electricity rates are going up is because there is not enough natural gas to meet current demand for both heat and electricity in New England during the coldest days of the year (and that’s the reason National Grid’s rate will likely come back down from May 1st through October 31^st of 2015).  Wind power may not be cheaper than natural gas year-round, but it is during the coldest days!

Why Customers of New England Wind and New England GreenStart Are Not Protected from Basic Service Price Increases

As a green power buyer, you might be wondering why increases in natural gas prices would affect your electricity bill. The reason is a bit complicated: the thing making a green power product “green” is that the supplier buys “renewable energy certificates” (RECs) from renewable generators – wind turbines, solar panels, etc.  Whoever buys the certificate can claim that the electricity they receive is renewable.  Mass Energy does just that – we buy those RECs wholesale and sell them to you retail. In effect, we play keep away from other suppliers who need them to comply with the state’s Renewable Portfolio Standard law.  That’s how we all make a difference together, by bringing more renewable energy onto the grid than the state law requires. 

But why do we need RECs? Because when a renewable generator puts physical electricity onto the grid it’s like a drop of water falling into a big pool; after the fact, there is no way to keep track of that specific piece of the whole. So when Mass Energy’s renewable generators put physical electricity on the grid, we simply can’t send it to your house. Instead, we are all getting RECs which gives us the right to claim that we are buying green power and quantifies our green power demand on the grid as a whole. Simply put, credits are the only way to choose the type of electricity you receive.

So our work as a renewable energy supplier is done in the market for RECs, not physical electricity.  Our renewable energy rate (or the price to purchase our project’s RECs) is not increasing. However, the physical energy from those renewable generators goes into the New England power grid and is sold on the power market. As a New England Wind or New England GreenStart member, the RECs you are purchasing ensure that renewable energy is put onto the grid in the first place. As a National Grid customer, the physical electricity that turns the lights on in your home is bought from the power market by National Grid, which unfortunately is giving us higher prices because of the natural gas problem mentioned above.

To put it plainly, the public is benefiting from our renewable energy purchases.  Our voluntary demand is shifting the make-up of the whole electric grid. And that is why we are eligible to deduct the cost of New England GreenStart and New England Wind on our federal taxes if we itemize charitable contributions.  But it is also why we are affected by this rate increase.

And by the way, when electricity prices fall, as they have in the recent past, Mass Energy never raises the cost of its green power.  New England Wind has been 3.8 cents since it began.  New England GreenStart was 2.5 cents before dropping to 2.4 cents.  On the other hand, National Grid’s rates, and those of other suppliers, have fluctuated a lot in recent years, as you can see below.

Can Mass Energy Do Better? 

We do hope that as membership rises, we will be able to reduce our prices. And maybe someday, if Mass Energy buys both the electricity and certificates from a wind generator, we could offer a price that is fixed for some time. It’s a difficult thing to achieve. 

What about Other Suppliers? 

For over ten years, we have looked for a competitive supplier that could help us offer green power at a good price.  It’s very hard for a competitive supplier to compete with National Grid or NSTAR for more than a few months.  We started working with a small supplier called Easy Energy in 2013, but they went out of business because of fluctuating electricity prices early last winter. 

We have seen promotions of several suppliers, but we caution you to be very careful because:

1)      They offer lower prices than the utility. But the fine print only guarantees that for a very short time.  After that, they are able to raise their rates. We expect that National Grid’s Basic Service rate will come down on May 1^st. 

2)      Some claim to offer green power. But we see that the RECs they buy are virtually meaningless.  They buy from projects out-of-state that are competitive without revenue from renewable energy certificates. In other words, the project would have been built if no one bought its RECs. So people who buy their products are not making a difference.  There is no bang for your buck.  Mass Energy decided long ago not to buy from these types of renewable energy projects. We want to supply a product that makes a real difference.  The renewable energy certificates we buy cost more because their revenue is needed to make the projects economically viable. 

3)      If you choose a competitive supplier, you will be unable to stay with New England GreenStart or New England Wind.  If you want to stay with one of our products, you must stay on National Grid’s Basic Service.

On October 19, the Boston Globe ran an important story on the topic of electricity suppliers.  It’s worth reading.

Saving Energy is the Best Way to Deal with High Rates

Like renewable energy, efficiency has enormous public benefits.  But efficiency is also the way to go for individuals like you and me.  When rates go up, it makes sense to save energy and almost all of us can find ways to reduce our electricity usage.  If you have not had an energy assessment, get one from Mass Save.  If you have had an assessment, review it and see if there’s something recommended that you still can do.  Here is what National Grid says are the Top 10 energy saving tips.

If you want some advice, please call Meredith in our office at 800-287-3950, ext. 128 or email her at Meredith@massenergy.org.  She would be happy to help you sort out the possibilities.

[1] Conservation Law Foundation, Environmental League of Massachusetts, Clean Water Action, Berkshire Environmental Action Team, Mass. Pipeline Awareness Network, Mothers Out Front, Mass. Audubon, Green Justice Coalition, National Wildlife Federation, and Appalachian Mountain Club.

[2] That’s by far the highest bill I have ever had, but it’s because I bought a Chevy Volt in late August. It’s a plug-in hybrid and I’m now using as much electricity for the car as for my house. But even with gasoline price falling and electricity rates increasing, it’s still cheaper for me to drive on wind power than gasoline.