Why your National Grid bill will be high again in May

In April, National Grid bills were somewhat lower than they'd been during the winter months. But this month, they'll rise again. Photo: John Stanford

In April, National Grid bills were somewhat lower than they’d been during the winter months. But this month, they’ll rise again. Photo: John Stanford

You may have noticed this winter that your National Grid bill was high. Really high. So much so that U.S. Sen. Charles Schumer has called for an investigation into possible rate gouging. Bills this year were, on average, 60 to 75 percent higher than last year (that’s according to New York Attorney General Eric Schneiderman.) April’s bills were somewhat lower, but it looks like May’s are going to be higher once again. Here’s why, according to an article in today’s Watertown Daily Times:

The utility has added a special commodity charge in May of about $10 for a typical household to cover leftover costs of supplying electricity to customers in March, when electricity bills peaked…That extra charge will appear on customers’ bills under the name “ESRM,” which stands for “electricity supply reconciliation mechanism.”

Basically, there’s a two-month lag in your bill between what the company thought it would cost them to deliver your energy and what it actually costs. So if it cost National Grid more than it anticipated to deliver your energy in March, you’ll pay the difference in May. (If it costs less, by the way, you’ll get a rebate. But we haven’t seen much of that this year.)

And get comfortable with higher bills: The WDT article says that although National Grid expects rates to stabilize this summer,

In June, National Grid will begin recovering a $33.3 million payment deferral that it enacted in February to delay collection of electricity costs from residential and small-business customers affected by increased commodity prices. Charges to collect that deferral will be spread out over six months.

More on that deferral here.

“How could this be???”

By the way, if you’ve opened up a huge utility bill and said, “how could this be???,” you may find this explanation, from cnycentral.com, quite useful (there’s also some useful information here, from the Albany Times-Union). It also addresses why prices seem to be so much higher during really cold winters like the one we’ve just had:

 [National Grid's Melanie] Littlejohn says the extreme cold temperatures cause homeowners to use more energy to stay warm. Because natural gas is diverted for residential use, the power companies which supply National Grid are forced to generate electricity with more expensive fuels such as oil and coal. National Grid passes along the higher priced electricity to you. “Whatever we purchase it at, that’s what we pass along. No markup, contrary to popular believe. Whatever we buy it we pass that along directly to the customer.”

So there you go.

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23 Comments on “Why your National Grid bill will be high again in May”

  1. The Original Larry says:

    What happened to the concept of a “public utility”? I have been paying utility bills for a long time and although I am fairly sure the laws of supply and demand were operative during that time, I have never seen this. Some business sectors operate (or at least they should) primarily in the public interest and should be regulated appropriately. We’ve already seen the consequences of applying the “gold mine” theory to health care. Maybe we should charge tuition and turn our schools into profit centers?

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  2. When National Grid bought Niagara Mohawk, one of the pretenses was that it would result in lower electricity rates due to the larger conglomerate’s economies of scale. Yet they always seem to have an excuse to jack up rates. Nice scam if you can get in on it.

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  3. The public electric utility in Massena’s TOTAL charge is less than National Greed’s DELIVERY ONLY charge (even before you pay for the actual supply). No wonder National Greed is a leading opponent of the legislative proposal to permit regional public electric utilities.

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  4. Ellen Rocco says:

    National Grid is a distribution company. The old utility, Niagara Mohawk, was both an energy producer and distributor. National Grid buys energy from a variety of sources. The theory was that the new system, which separated distribution company from producing company, would be more efficient because the distributor could pick and choose energy sources based on best price, or type of energy (if, let’s say, the distributor wanted to offer “green” sourced energy rather than “dirty” sourced energy). That was the theory. Prices continue to rise. On the other hand, prices may have continued to rise with the old system. Perhaps prices SHOULD continue to rise in the context of climate change. Perhaps there should be a sliding scale for energy cost based on income or some other adjustment method to alleviate stress on middle and low income families. Perhaps utilities should offer rebates to fund improved energy efficiency in homes. Perhaps it’s time for some new approaches to regulating essential utilities.

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  5. zeke says:

    There is no doubt that there is a glut of power in the N.C. So I am not really understanding why there is such an increase. Ask Everett Smith.

    Like/Dislike this comment: Thumb up 3 Thumb down 1

  6. knuckleheadedliberal says:

    The utilities learned from Enron. You can make a lot of money quickly through large acts of fraud in the energy supply system, but that could lead to federal investigations. Or you can make still lots of money, just not quite so much, through complicated billing, separation of energy supply and distribution costs…lots of small acts within a large system that become very difficult to pinpoint.

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  7. The Original Larry says:

    “Perhaps prices SHOULD continue to rise in the context of climate change.”

    That makes no sense at all and is the kind of statement that makes otherwise reasonable folks scream when they hear the words “climate change”.

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  8. knuckleheadedliberal says:

    “Perhaps prices SHOULD continue to rise in the context of climate change.”

    Don’t dismiss an idea out of hand without some consideration of the whole context of the statement. Ellen was exploring and idea. Exploring is good. Henry Hudson sailed up the river that bears his name hoping to find passage to the Far East. He reached the falls near what is now Albany and had to turn around, but he found some good stuff along the way.

    On the other hand his crew got sick of all his exploring and set him adrift in the far north, but that isn’t the point.

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  9. Mervel says:

    Well if energy is more expensive we are all going to really think a LOT harder about how to use less of it and how to find alternative means to light and heat our homes. I think Ellen has a point.

    However from national grid’s standpoint I find it kind of ironic that if you choose to use more natural gas to heat etc, and thus maybe use less electricity, they come back and say, well because YOU are using more natural gas our price to generate electricity is higher and thus we will charge you more. Essentially if we try to conserve on electricity they just raise the price.

    Also we are in the midst of a natural gas boom in this country, the energy sector is worried that the price of natural gas is to LOW not to high. I am not buying the natural gas excuse from National Grid. I think more likely it is essentially supply and demand, the demand goes up for their product they thus can charge more and do. Has the price for municipal owned utilities providing energy also gone up?

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  10. OLarry: I can’t read Ellen’s mind but I inferred her comment to mean that prices should rise as per the laws of economics.

    Unpredictable weather caused by climate change can affect the stability of the energy supply. For example, if there is little precipitation, then that will affect the amount of energy generated by hydropower, a major source in NYS. It also can increase energy demand, if it’s excessively hot or cold. Obviously increased demand and/or decreased supply is going to cause prices to rise.

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  11. myown says:

    Anyone had any luck using this PSC website to choose a different energy suppler than National Grid?

    http://www.newyorkpowertochoose.com/index.cfm

    I am not sure how you can compare prices when National Grid’s pricing is so complicated. From recent news articles it seems your NG bill shows how much electricity you consumed the past month but the price per unit is based on what NG thinks prices will be two months from now. If they guess wrong there is an adjustment on the next month’s bill called ERSM to charge you more or give you credit. I don’t know why they can’t just accurately bill you for the electricity used the past month – not what it might cost two months from now?

    A reporter needs to do an article and have National Grid explain how their billing process works and why it can’t be simpler.

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  12. dave says:

    “Perhaps prices SHOULD continue to rise in the context of climate change.”

    If prices are rising as a product of market pressures due to climate changes, that is one thing. I am also ok with prices rising as a “sin tax” (intended or not) to discourage the kind of wastefulness that contributes to climate change. And I could care less who ‘screams’ at the thought of that. The time to coddle people over this issue is long past.

    However, if prices are going up simply as a means to stuff more dollars in the pockets of energy companies… well, then I think all of us should be screaming about that. It should be pretty easy to tell if they are gouging us while rolling in profit, shouldn’t it? It is a public company.

    “Perhaps there should be a sliding scale for energy cost based on income or some other adjustment method to alleviate stress on middle and low income families.”

    That makes even me uncomfortable. I am all for a progressive tax system, and I favor (tightly regulated, highly efficient) social assistance programs to help low income families… but the idea of adjusting prices for goods or services based on the purchaser’s income makes me cringe.

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  13. Mervel says:

    I don’t have a problem with that part of it, except it seems like it would be an administrative nightmare. Its hard enough to monitor incomes etc, for people getting other types of assistance, it would mean tons of paperwork for the customer, would we have to submit pay stubs etc?

    It is my understanding that municipal owned utilities in the North Country do indeed have lower prices for electricity, but was not sure if this was still the case.

    There is always this idea that the private market is more efficient and sometimes it is; but in the case of monopolies I don’t think it makes a difference and a coop or customer owned utility or municipal utility I think is a better route.

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  14. knuckleheadedliberal says:

    For all of you who believe government can’t do anything right and private business is better and more efficient I have two words: National Grid.

    Like/Dislike this comment: Thumb up 2 Thumb down 1

  15. The Original Larry says:

    Really, Dave? A “sin tax” to promote energy conservation? Is this another dubious, poorly thought out proposal from the climate change folks, or did you come up with this nonsense on your own? How about a tax on SUVs and other gas-sucking monstrosities? That at least is voluntary wastefulness. Heating and lighting one’s home isn’t and that’s what we’ve ben talking about here.

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  16. Walker says:

    Larry, how big a house you heat is very much a voluntary matter, as is how well it’s insulated and weather sealed. Think of it as a market-based approach, not a sin tax.

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  17. The Original Larry says:

    Walker, dave, et al: what you propose are regressive taxes, of which we have too many already. If you were really concerned about the plight of the poor, you would think these things through and try to come up with solutions that didn’t hurt them more than they help them. But you don’t think them through; the knee-jerk reaction is always “tax it”, “ban it”, “restrict it” or make the rich pay for it. We’ve had enough of “solutions” that don’t work. As far as coddling people on the climate change issue goes, what sort of reaction to a “sin tax” on energy do you expect from people who are already struggling to feed, clothe and house their families?

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  18. Walker says:

    So, Larry, what’s your solution to keeping the planet livable for your children and grandchildren?

    Like/Dislike this comment: Thumb up 2 Thumb down 2

  19. dave says:

    “Really, Dave? A “sin tax” to promote energy conservation? Is this another dubious, poorly thought out proposal from the climate change folks, or did you come up with this nonsense on your own?”

    If you were tracking the conversation and reading the comments, you would have seen that it was nothing more than a response to a hypothetical question from Ellen. Those shady, evil “climate change folks” have proposed no such thing, that I am aware of.

    To your larger point about regressive taxes, there are already public assistance programs in place to help people who are at the very bottom of the economic ladder and have trouble meeting mandatory heating and electricity costs. I fully support those programs. But any cost above what one needs for general welfare is not involuntary. It is luxury and personal preference. My neighbors who keep their thermostat set at 79 degress in the winter, run 4 air conditioners in the summer, and refuse to insulate their attic are choosing to do that. They don’t need to. I have no sympathy when they complain about their utility bills and have no problem with them paying even more for their decision to be excessive.

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  20. knuckleheadedliberal says:

    When gasoline was much cheaper we should have instituted higher taxes on it. Big Oil will raise the price to whatever the market will bear and the higher tax would act as a buffer to limit maximum price. At least the tax would benefit everyone to some extent instead of going to excessive profits for companies that get huge subsidies.

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  21. Michael Greer says:

    …and what about this “gas glut”? Did we sell it to someone else? Did we poison the drinking water in six states to make a very few people rich, and burn it all keeping other nations comfortable?? What does the American public get out of an American resource?

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  22. The problem with a “sin tax” on energy is that it would have the most negative effect on the less well-off. The less well-off are the ones who can’t afford solar panels. They can’t afford Priuses. They can’t afford to properly insulate their homes, etc.

    I’m not poor, but I rent my apartment and my options for energy are either take it or leave it.

    What we need to do first is re-direct federal subsidies to renewable energy rather than subsidizing inefficient fossil fuels. This will bring the cost of “good” energy sources down. Only then might a “sin tax” on fossil fuels be remotely fair.

    We should also direct more money to enabling and expanding access to more efficient forms of transportation: walking, biking, public transit, etc.

    Implementing punitive taxes without enabling positive alternatives is, well, just punitive.

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  23. Kent Gregson says:

    I don’t consider electricity to be different from other utilities at home. Some folks have municipal water and or sewer, some provide their own. We provide our own electricity as well as septic system. If it needs fixing we fix it or call someone who can. We do this without wealth or ease, but find it comfortable and reassuring here where the grid is so unreliable and reprehensible in methods.

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