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Unavoidable Increase: Choose to Save

To get straight to the point, energy rates are projected to skyrocket this winter. World Energy compiled the top five reasons that energy rates will hit a sharp incline within the coming year. This increase is likely to last more than just this year. Electricity prices in the winter of 2013 were about 7-9 cents per kWh. Prices this year are expected to reach about 12-16 cents. This is more than a 50% increase from last winter. Let’s look at World Energy’s top five reasons for the projected increases.

First, many homeowners are switching to natural gas. The switch from oil to natural gas is cleaner and often more efficient. Over the past three years, we have seen a sharp increase in residents switching from oil to natural gas. In Connecticut, for example, the governor wants to provide natural gas heat to 280,000 new residents in the upcoming decade. This will lead to rising costs for non-residential buildings. Because residents have priority on the pipeline in the winter, the electricity generators must switch to their alternative source: oil. This causes electricity prices to rise, because oil is more expensive than natural gas.

The second factor that will have an effect on electricity prices is called the ISO-New England’s Winter Reliability Program. This program will be put in place to build up extra fuel for  homes that rely on oil. The program was initially created to meet the winter’s energy demands. Because half of the capacity to generate electricity in New England is gas-fired, there is often not enough pipeline capacity to meet these winter demands. The program provides extra fuel to fill in any gaps in capacity.

The third addition to your electricity bills is the closure of electric power plants. There are currently five coal-fired power plants throughout New England. Out of these five plants, the Vermont Yankee plant will close this year, and the Brayton Point plant has plans to close in 2017. The other three coal-fired plants are expected to close by 2018. These coal-fired plants will no longer generate electricity, so there will be an increased dependence on the natural gas pipeline.

The fourth point that will cause this increase in electricity prices is the addition of capacity zones. New England currently has one capacity zone, but this single zone will increase to four by 2016. With the addition of three more zones, the capacity costs of the Northeast Massachusetts zone will be twice as high as the other zones.

The last reason that our bills will increase is due to the increased national and global demand for energy. Regions both nationally and globally are turning to alternative resources. For example, California’s recent drought has led to a search for an alternative to hydropower. In Ontario, nuclear power plants are undergoing upgrades. During this time, Ontario will have to import natural gas as an alternative fuel. Also, Europe no longer has access to its previous natural gas resources and will now have to look elsewhere. The search for energy increases its value, and therefore increases its cost.

Due to these five reasons, your electricity bills will see an increase in the coming years. Luckily, you can save in other areas. Insulate and air seal your home to save on your heating this winter, and following winters.