Eversource Energy on Wednesday warned that customers will likely see a spike in their electricity and gas bills this winter compared to last year’s, as natural gas prices surge nationwide.
During a call with investors Wednesday to discuss its third-quarter earnings, Eversource CFO Philip Lembo said that starting in January ratepayers in Connecticut and Massachusetts will likely see a 2- to 3-cent/kWh rate increase on their bills, which translates to an additional $20 to $25/month on a typical bill. Gas customers can expect an increase of about $30. New Hampshire rates remain in effect until February.
Energy prices hit 10-year lows in 2020 amid the COVID-19 pandemic. Because of wintertime natural gas constraints in New England, ratepayers usually see up to a 2-cent/kWh increase in January that often reverses by the summer, but gas prices have risen significantly since the beginning of the year, driven by an increase in global demand during the ongoing economic recovery and a significant drop in U.S. gas supply. Between Oct. 20 and 27, natural gas spot prices rose from $4.79/MMBtu to $5.86/MMBtu, according to the most recent weekly report from the U.S. Energy Information Administration. At the Algonquin Citygate, which serves Boston-area consumers, the price went up from $4.52/MMBtu to $5.65/MMBtu.
Isaias Settlement
The earnings results came on the heels of last week’s announcement of an approved settlement over penalties and return on equity reductions levied on the utility for its handling of Tropical Storm Isaias in August 2020. The settlement will provide $65 million in bill credits and $10 million for low-income assistance programs.
“Settling critical regulatory and legal disputes was a necessity to reset our relationship with key Connecticut stakeholders,” Eversource CEO Joe Nolan said. “We all want the state to move ahead on addressing critical energy and climate issues, and the outstanding disputes have the potential to delay some of this important work.”
Before the settlement, Eversource would have been set to lose more than $150 million based on the penalties and ROE cuts thanks to the Take Back Our Grid Act, which directed the Public Utilities Regulatory Authority to develop and implement performance-based regulations including financial penalties and ROE reductions.
In a rare dissent, PURA Chair Marissa Gillett said that “more devastating storms” like Isaias “will come to pass,” and tools such as an ROE reduction “would more acutely encourage Eversource’s executives to properly prepare for and respond to such storms.” Gillett also said she was “apprehensive of a future where we still do not have a court-backed interpretation of PURA’s regulatory authority in holding utilities accountable following a storm event.”
State Rep. David Arconti (D), co-chair of the General Assembly’s Energy and Technology Committee, told RTO Insider that Eversource “may want to move forward, but I’m not necessarily there yet.”
Arconti said the Lamont administration, like previous administrations, had a predisposition to settle, but “there are some cases where I think it’s worth it to go to the mat.”
“I do think the settlement is just more par for the course and kind of perpetuates some of the norms on how we’ve gotten to where with certain things,” Arconti said.
When the average person looks at the settlement, they will not understand why specific rates are frozen and other areas are increasing on their bills, he said. “It doesn’t help us do our job when the people see stuff like that.”
Earnings
Eversource reported earnings of $283.2 million ($0.82/share), down from $346.3 million ($1.01/share) for the same period in 2020. The company’s transmission segment earned $139.4 million in the quarter, nearly $14 million more than last year’s. Eversource attributed the increase to higher level of investment in its infrastructure.
Call transcript courtesy of Seeking Alpha.