As temperatures rise for summer,
electricity prices usually follow that same upward trend,
but this year rates could be especially high air conditioning during the summer,
which means people are using more electricity and when there's a higher demand,
it can result in higher prices.
An estimate from ever source energy.
New England's largest energy delivery company said the average residential customer could see bills
increased by as much as 25% through the end of June.
So how did the cost of electricity get so high and what can households do to manage the price hike
come summertime?
It's a story involving geopolitics,
severe weather events and inflation and at the center of it lies one resource
natural gas.
It's very important.
It's the largest source of generation at this time,
renewables,
including hydro,
our second but natural gas is still far and away.
The largest source of generation that we have.
Natural gas is used to produce electricity using a three step process.
First,
it's extracted from beneath the Earth's surface and delivered to power plants via pipelines.
Those power plants use natural gas to power turbines that allow for the generation of electricity.
That electricity is then sent through power lines for use at your home in 2011,
the United States surpassed Russia to become the world's largest producer of the commodity.
But extreme weather events of the last year,
like the freeze in texas,
heatwaves in the west and a hurricane in Louisiana have challenged domestic supply.
21 was a rough year in terms of disasters that had an effect on natural gas
production.
So at first,
during the texas freeze,
um,
a big part of the problem was a lot of wellheads were frozen off and therefore the production dropped pretty
precipitously at a time when demand was very high.
Hurricane IDa didn't help either because there was a drop off in production as oil and gas producers
paused production in the gulf.
Producers in the US have benefited from strong global demand as they've increased exports to places like
europe.
There's not a direct correlation between prices in europe and prices in the US,
but they are related in the sense that For the last several years we have been exporting natural
gas abroad.
The us has steadily increased its exports of liquefied natural gas to Europe.
Since 2016,
Russia is also one of europe's top suppliers.
But with the war in Ukraine,
concerns about natural gas supply are growing.
The war in Ukraine has made it so that european countries are trying to quickly reduce their reliance on Russian
gas,
which creates the need for greater supplies coming from elsewhere.
And we are helping to fill that gap by exporting more abroad,
which drives up prices here by reducing supplies.
The confluence of weather events depleting inventories and higher demand,
pushing up prices,
has led to increased residential electricity prices across nine regions on a year over year
basis in general,
when a company is incurring higher energy costs,
it was able to recoup that through customers in the form of higher prices,
there is some level of regulatory approval associated with that,
but it's usually not just allowed in any way.
15 states have seen their home electricity rates increased by at least 10% from january of
last year,
but some changes can help manage the cost.
A number of utilities offer plans that allow you to pay less for
electricity if you're using an outside of peak hours,
which is typically maybe 4 to 9 p.m. For instance,
take this mock electric bill from Con Edison.
If the customer opted for time of use rates,
they would see separate charges for on peak off peak usage during the summer.
Con Edison's peak rate is approximately 26 cents per kilowatt hour,
which is around double the standard rate,
but during off peak hours,
that customer would only pay about two cents per kilowatt hour.
Peak rates can vary depending on the utility.
So if you want to run your A.
C.
Or charge your electric vehicle and may be cheaper to do so around nine am or 10 am,
um instead of in the afternoon,
when you see a surge in demand beyond what a consumer can control the state's public utility Commission
can regulate costs,
but its reach is limited.
They do not regulate natural gas prices,
but what they can do is determine the extent to which the utility can pass through those costs to consumers.
In general.
Those costs are passed through with no change,
but if you know,
for example,
you had an issue like the texas freeze,
in which gas prices went through the roof.
The utilities commission can help determine whether the utility should pass through all those costs or
whether it should do so over a longer period of time.
So it's not to hit consumers with huge rate increases.
Still,
many believe high electricity costs,
maybe longer term as power companies plan to spend the most money in decades to shift to renewable energy
and replace aging infrastructure.
These spending plans have the potential to further boost rates at a time when natural gas prices are already
fairly high.
And other inflationary pressures have had have made,
you know,
for example,
building renewable energy projects more expensive for now,
the increase in electric bills relate to higher natural gas prices.
But if these utilities receive regulatory approval for their capital spending plans over the next
several years,
you may begin to see rate increases associated with that spending,
mm hmm.