A seasonal drop in the cost of natural gas used to generate electricity will trigger a corresponding decline in Connecticut’s standard service rates for most residential electricity customers, under a state regulatory ruling issued Friday.
The result is that more than 999,000 of Eversource’s 1.2 million residential customers are likely to see their monthly bills remain about the same despite a major overall rate increase the company was granted last month, officials said.
Most United Illuminating customers will see their monthly electricity rate decline because of the reduction in the state’s standard service rate, state Consumer Counsel Elin Swanson Katz said Friday.
“For UI customers, it will be a bill decrease,” she said.
As of July 1, Eversource’s standard residential generation rate will drop from 9.08 cents per kilowatt-hour (kWh) to 8.53 cents per kWh under the decision announced Friday by the Public Utilities Regulatory Authority.
United Illuminating’s standard residential generation rate will decrease from 9.66 cents per kWh to 9.05 cents per kWh as of July 1 as a result of the PURA ruling. UI serves about 334,000 customers in Connecticut, primarily in the southwestern region of the state.
About 70 percent of Connecticut residential electricity customers get their power using the state’s standard service rate. The rest have chosen to get their electricity from third-party suppliers that offer different service rates.
Last month, PURA granted Eversource a three-year, $124.7 million overall rate increase. Under that decision, average Eversource residential customers were expected to see their monthly bills jump by about $5.40.
But Eversource spokesman Mitch Gross said Friday the newly approved reduction in the standard service rate means that most residential customers “basically should see very little change [in their monthly bills] if at all … if they maintain their current consumption.”
According to Katz, Eversource’s standard rate reduction means that monthly bills for average electricity customers “could be close to even” despite the overall rate increase approved by the state in April.
Katz and Gross said the reason the standard service rates are dropping is that the cost of natural gas declines during warmer weather.
Natural gas is used to generate more than 50 percent of electricity in the New England region. In winter, the demand for natural gas to heat homes increases, pushing up prices in the region, and that resulting in higher electricity generation costs.
The lower standard service rates for Connecticut approved this week “are directly related to the demand for natural gas,” Gross said.
“Typically, you see summer prices for natural gas lower than in the winter,” Katz said.
PURA officials said the standard service rates for Eversource and UI were “based on competitive auctions held earlier this year to procure the electricity needed to meet forecasted load.”