National Grid defends higher electric rates
Not only has this winter caused record-breaking temperatures, snowfall, and utter misery, it has also caused a very heavy burden on the electric bill.
Buffalo Region National Grid Spokesman Steve Brady explained the reason for the bills soaring this winter.
“National Grid electric is broken down into two basic pieces – delivery and supply,” he said. “It is built on a usage basis.”
Brady added the bills go up in the winter not because the rates change, but because people need more electricity.
“The rates per unit has gone down twice in recent years,” he said. “The bills go up in the winter because people are using more.”
The actual electricity itself is bought by companies from a wholesale market. Customers choose what electric company they purchase their electricity from, like National Grid.
“There have been fairly high spikes this winter,” Brady said. “This has been driving customers’ bills up; a 40 percent hike is not out of the norm for this winter.”
Brady insisted the hike is not making National Grid any richer.
“National Grid customers pay one check to us,” he said. “We are not benefiting over supply costs being so high; we get whatever the customer pays us.”
If a customer pays $50 for an electric bill, that is what National Grid gets. There is no extra hidden money coming from that bill to profit them, according to Brady.
“We appreciate it has been painful; causing a lot of eye popping bills,” he said. “We buy our supply on a competitive market. Our customers buy from us and we don’t profit from high winters; we don’t control that side of the bill.”
Brady added when the price of gas goes up, so does the price of electricity and it typically comes from power plants that make electricity. He added the other reason is it has been so cold for so long for such a large part of the country that the demand of gas has sky rocketed dramatically.
“This January was so ridiculously cold, many generators were required to switch to other fuel options,” he said. “Oil is more expensive than natural gas and many have been forced to switch to oil, which has caused a double whammy.”
Brady explained the process of billing.
“We forecast what we think the price will be in January. In February, we add up what was actually paid, and in March, we collect the difference,” he said. “Every month has a two-month lag.”
Brady pointed out April’s prices will be hefty as well, but there should be relief in May.
“We are obligated to get energy so we don’t lose or gain profit,” he said. “The lag is our way to collect the cost. This is the supply side of the bill that looks at market conditions.”
Brady addressed the very difficult winter and is offering customers some help.
“We understand this has been hard on customers,” he said. “We have created outreach programs for customers to help them handle the bills.”
There are a number of programs out there for customer relief, but the one Brady strongly recommended is the Balance Billing Program.
“We look at the past 12 months of usage,” Brady said. “We set a price they pay every month and it eliminates all the peaks and valleys in the bills.”
There is also Advance Budget, which is a set pay every month. It is free to sign up and if you don’t like it, you can get out of it at no charge.
“We encourage people to do these programs and not wait to let us know they need help,” Brady said. “Don’t wait to get in touch with us. If customers wait, it gets harder to help them.”
Brady added National Grid also helps direct customers to outside outlets as well, putting them in touch with other programs like HEAP.
Sen. Charles Schumer recently called for an investigation into soaring electricity prices.
The New York Democrat says that he is urging the Federal Trade Commission to look at whether utility prices have been artificially inflated. Schumer says consumers have complained to his office about monthly bill increases of as much as 100 percent.
Schumer says he is concerned electric bills seem to be rising faster than the price of natural gas used in many power plants.
Brady noted National Grid makes their profits on the delivery side of the bill, not the supply side.
“We are very sensitive to the fact that this has been tough winter for people,” he said. “This is why we are cranking out the outreach programs.”