The Energy Council of Rhode Island did the math the other day, and it came out to half a billion dollars. That, said Executive Director John Farley, is how much the rise in gas and electricity prices has cost the state’s residents and businesses since May of 2003.
The hikes hurt everyone, Farley said, but they have a particularly big impact on major energy users, such as manufacturers with processes that require a lot of power and/or heat.
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“I have one major manufacturer whose [annual] energy bill has gone from $17 million two years ago, to $29 million,” Farley said. “You can imagine what that means in terms of bottom line, or expansion, or even keeping jobs.”
Since December 2003 alone, National Grid figures show, the generation cost of electricity – the core of any customer’s bill – has risen 49 percent, to 8.2 cents per kilowatt-hour, resulting in rate hikes of 19.4 percent (for the smallest customers) to 28.8 percent (for the largest).
The company had sought to raise that base rate to 10.2 cents as of Dec. 1, but the state Public Utilities Commission pushed for a revision to reflect stabilizing energy prices. National Grid came back with a proposed 10.0 cents per kwh, effective
Jan. 1; the request is pending.
As things stand, large commercial and industrial customers still pay National Grid’s lowest rates, 11.53 cents per kwh in Rhode Island, while small businesses pay the highest rates, 14.44 cents per kwh (residential customers pay 14.12 cents, up 19.8 percent from December 2003).
And more than 2,000 large Rhode Island customers, including municipalities and school districts, have left National Grid altogether and gotten lower, guaranteed long-term rates elsewhere, spokesman David D. Graves said. Farley said about half of TEC-RI’s four dozen members have switched, “and some of them are doing pretty well,” but only if they signed up a year or two ago; now open-market rates are often higher.
The outlook for heat is equally dire. As of Nov. 15, the wholesale price of heating oil was up 73.6 percent from December 2003 prices, to $2.43 per gallon, and natural gas has risen a cumulative 18.9 percent, New England Gas Co. figures show.
Mid-sized and larger commercial/industrial customers can save by buying their own gas and paying New England Gas to deliver it. Many TEC-RI members do that, as do some members of the Rhode Island Hospitality and Tourism Association, which has a purchasing collective.
But with energy prices up across the board, the utilities – especially National Grid – are promoting energy efficiency as the best strategy.
The electric company even provides free “energy audits” and pays 75 percent of the cost of improvements for small businesses, with interest-free financing for the rest. For large businesses, it provides incentives for up to 45 percent of the cost.
Yet the response has been modest. Timothy M. Stout, vice president and director of energy efficiency for National Grid, said in 2004, 609 small businesses participated, down from 662 in 2003; as of October this year, 521 small businesses had signed up. Among large businesses, a total of 490 participated in 2004, and 339 had signed up as of October of this year.
“I think many of them recognize they could reduce [their] bills through energy efficiency,” Stout said. “But their oil has gone up, their gas has gone up, their utilities in general have gone up … so they may have less money available, in the short term, for efficiency.”
At TEC-RI, Farley said many manufacturers are finding it’s easier to move their energy-intensive processes to other states, especially in the South, where energy prices are lower; Rhode Island has the fifth-highest electrical rates for industrial customers in the nation.
Others who can’t relocate, or who don’t want to, are trying to cut back in other ways, Farley said – never a good thing for the state, given that they employ 60,000 to 70,000 people here.
“I’ve had members tell me they’re not going to sacrifice their overall corporate or organizational objectives, but they’re going to cut in other areas, and that comes down to jobs,” Farley said.
