Bay Staters Brace for Rising Energy Costs
If you were to talk to a resident of Boston, Massachusetts and a resident of Boston, England you might find that they have something surprising in common besides the obvious: a concern for rising energy prices. Strains on the natural gas supply have made ripples both domestically and across the pond. Many households are already feeling the squeeze of inflation, and the additional cost that comes from heating their homes during the coming winter is looming on the horizon. In the UK, price caps on energy and gas bills have increased 96% since winter of last year, according to the House of Commons Library. Massachusetts is on track to see a similar increase.
Eversource and National Grid are the two largest electric utility companies in Massachusetts; they serve 1.4 million and 1.2 million customers respectively, according to rate comparison website Mass Energy Rates. Both companies have stated their intentions to raise rates this coming winter. WCVB reported that National Grid customers could see their bill increase 64% from last winter (based on rates for an average customer using 600 kilowatt-hours per month), and that the rate change is set to take place on November 1. WCVB also reported that Eversource is to propose rate increases in mid-November to take effect in 2023.
Why the spike? The roots are both international and local. Massachusetts relies heavily on natural gas. The US Energy Information Administration (EIA) estimates that over half of Massachusetts households used natural gas to heat their homes in 2021. Fossil fuel production slowed during the COVID-19 pandemic when demand dropped, but demand has since rebounded. The war in Ukraine means Europe is cut-off from Russia’s natural gas, meaning there is a global drop in supply. The US has been shipping liquefied natural gas (LNG) to Europe to help make up for the deficit, creating a boom in an already growing industry. According to the EIA, exports have increased from 9.7 billion cubic feet per day (Bcf/d) to 11.1 billion Bcf/d, making the US the largest exporter of LGN in the world. In short, high demand plus low supply equals increased prices. Massachusetts is also working with a limited energy infrastructure. As the state attempts to transition to a greener energy grid, it has declined to build additional interstate pipelines to bring in natural gas. Writing for CommonWealth magazine, editor Bruce Mohl explains that this limited capacity means it is difficult to transport new gas when demand peaks during emergencies.
Eversource CEO Joseph R. Nolan Jr. sent a letter to President Biden on October 27, writing that he was “deeply concerned” that New England would not have a stable natural gas supply if faced with a harsh winter. He implored the president to use emergency powers if necessary to ensure that New England has adequate energy resources.
