Massachusetts consumers and businesses could be in for some sticker shock this winter when they open their electric bills — and feel the impact of a war an ocean away.
A rate filing on Wednesday from National Grid, showing wintertime power bills rising more than 60 percent from a year ago, is just the latest example of how Russia’s invasion of Ukraine and related energy supply issues are hitting close to home as the winter heating season approaches. Both National Grid and Eversource, the state’s two dominant utilities, have filed for increases in gas rates within the past week, and Eversource is expected to raise its electric rates as well. The higher fuel costs, also seen in the heating oil and propane markets, come as residents face inflation almost everywhere they turn.
Sharon Scott-Chandler, chief executive of Action for Boston Community Development, said she’s particularly worried about how rising food prices, on top of the utility bills, will affect the people helped by her social service agency.
“It’s everything at once,” Scott-Chandler said. “It’s really burdening families even more this year.”
In National Grid’s case, the utility filed its new electric rates for Massachusetts with the state Department of Public Utilities on Wednesday, and the outlook is not pretty: The monthly bill of a typical residential electric customer will rise from $179 last winter to $293 this winter, for the six months that begin on Nov. 1 — a 64 percent increase from the same time a year ago.
Blame the natural gas wholesale market. Despite efforts to shift New England toward renewable energy sources, natural gas-fired power plants still provide at least half of the region’s electricity. Costs for obtaining gas have skyrocketed following Russia’s invasion of Ukraine and the subsequent natural gas shortage in Europe. As a regulated utility, National Grid passes the cost of the electricity it has procured on to customers with no markup. This winter, the electric supply portion will make up about two-thirds of National Grid’s electric bills.
“We’re competing with Europe in a way that we’ve never done before,” said Paul Flemming, managing director of ESAI Power, an energy research and consulting firm.
Richard Levitan, president of energy consultancy Levitan & Associates, said the interruption of pipeline gas from Russia to Europe has spiked demand for liquefied natural gas that can be shipped overseas. Plus, Levitan said, New England’s limited pipeline capacity drives up electric prices as power plants take a back seat to customers who use natural gas for heat in the winter.
“National Grid hasn’t done anything wrong,” Levitan said. “They’re just passing through the unavoidable costs. [But] are we feeling it more than other parts of the country? I think the answer is probably yes.”
Helen Burt, National Grid’s chief customer officer, said the utility procured its electricity supplies for the upcoming winter in two tranches: one set of purchases took place in the spring, just as wholesale gas prices were starting to rise as a result of the Ukraine conflict; the other purchase happened earlier this month, after wholesale prices had risen even further.
To help customers, National Grid has launched what it calls a “winter customer savings initiative,” an effort to highlight various programs for energy savings, flexible payments to spread out the expense, and discounted rates for customers with low incomes.
Attorney General Maura Healey’s office issued a statement saying the National Grid increase will be “devastating for hundreds of thousands of customers in Massachusetts who simply cannot afford it.” Healey’s staff plans to meet with utilities, state regulators, and advocacy groups to address the problem.
Burt said about half of National Grid’s 1.35 million Massachusetts electric customers, roughly 667,000 accounts, still get basic service, meaning they rely on National Grid to procure their electricity supplies as opposed to shopping for a competitive supplier. Many other households will not pay for this specific increase because they have moved to competitive suppliers in recent years amid a trend of municipal aggregation, in which cities and towns make large power purchases on behalf of residents, usually to support more-renewable electricity.
National Grid, which has about 960,000 natural gas accounts in Massachusetts, also filed with the state DPU last week for new natural gas heating rates. Typical residential customers should expect a 22 to 24 percent increase from last winter’s bills, or an additional $50 a month. Those hikes will be less severe than the electric bills because National Grid uses a hedging strategy to buy natural gas over time, and a significant amount of the gas was procured before the Ukraine war began.
Many Eversource gas customers could see even bigger increases: The company said typical residential accounts in the former NStar Gas territory will see an increase of 34 percent from last winter, or roughly $78, on monthly gas bills starting in November, while those in the former Columbia Gas territory face a 25 percent increase, or $61 a month.
It’s not yet clear what Eversource’s new electric rates will be; the utility plans to file them for the January-to-June rate season in mid-November. However, Eversource recently reported a huge increase for its electric customers in New Hampshire that took effect in August, in which the supply portion of the bills more than doubled, reflecting the sharp run-up in natural gas prices.
Cynthia Arcate, former chief executive of nonprofit electricity buyer PowerOptions, said she hopes electric prices might settle down once the LNG market becomes less volatile.
“I don’t know if you can definitively say this is something we’re going to be living with for some period of time,” Arcate said. “It’s just going to be a rough winter.”
Those dynamics are why Scott-Chandler’s group, ABCD, is pushing for the Legislature to include $10 million for heating assistance in the state’s latest economic development bill, which failed to pass before formal sessions ended for the year this summer. (Legislative leaders hope to pass some version of the bill later this fall.) She said ABCD is also pushing lawmakers for another $10 million to be included in a supplemental state budget.
Daphne Terry, a Dedham resident who works as a home health aide and receives assistance from ABCD, is dreading the Eversouce electric bills this winter. She said she is already struggling to pay them.
“I’m playing catchup,” Terry said. “I feel like I’m drowning . . . because the bills are so high.”