What's On This Electric Bill, Anyway?

Nov 20, 2014

NStar's Michael Durand sits down with electricity customer Barbara Meehan at her Wareham home to discuss her bill.

Utility company officials don't usually make house calls. But NStar spokesperson Michael Durand agreed to sit down with an NStar customer and talk about her electric bill. So we introduced Durand to 72-year-old Barbara Meehan of Wareham.

For her part, Meehan doesn't use much electricity. She lives alone, she religiously shuts off lights, and she doesn't use air conditioners. Come wintertime, she says she keeps the thermostat as low as she can stand it.

"It's just me," she said. "It's basically a family home, two bedrooms, a bathroom, a half-basement, the kitchen, the living room."

Meehan also doesn't pay much attention to her electric bill -- outside of paying it each month. But on this two-sided document are categories of information that go a long way towards explaining why the region's electricity rates are going up. And about some of the efforts underway to prevent those prices from remaining high.

"I guess my question is -- not that I ever question my bill, I just pay it -- but the difference between delivery charge and generation charge? What's what?" she asked.

"That's a very good question," Durand said. "And it's one that we find there's still a considerable amount of confusion and misunderstanding."

It's also a question that goes directly to why electricity rates are going up.

As Durand explains, delivery services are what utilities such as NStar and National Grid charge for using its infrastructure -- the equipment out on the street and beyond. There's no price increase coming there. It's the generation charge, sometimes called the supply rate -- the actual cost of the electricity itself -- that's going up between 29 and 37 percent for the average customers.

On Cape Cod, that electricity typically is purchased by the Cape Light Compact, and then distributed by NSTAR. As for pricing, it varies. In recent months, CLC says its prices have been lower than NStar's. But at other times, they've been substantially higher.

"The price of natural gas has dropped considerably over the last few years," Durand said, "because of new supplies domestically that we're able to access. Because of that, the generating companies are relying more and more on natural gas because it is more efficient and inexpensive fuel. So it generally will keep the price of electricity down."

But that's not what's happening. Yes, more power plants are relying on natural gas for fuel. But electricity prices are going up this year, and industry experts say they'll likely stay high well into 2017.

"Because of that increased reliance, the capacity of the existing pipelines in the region, which are the big pipes that carry the gas into New England, has not kept up with the need for the gas at the generator," Durand said. "So even though gas is still plentiful and inexpensive in the country, getting it into our region has become an issue for the electricity generators. And the price is starting to reflect that."

"My neighbor just recently told me that this winter," Meehan said, "supposedly electricity is going to go up $30 a month. Is that true?"

It's unlikely Meehan will see a $30 increase per month, because with no AC, no dishwasher, and just her at home, she uses significantly less electricity than the average household. Last month, her bill was just under $45 dollars.

"Our average customer uses about 500 kilowatt-hours," Durand said. "I noticed quickly that you use about 200, so you're doing extremely well."

"Oh, okay," she said.

Meehan wants to know about the stuff she uses in her house. For example, is it bad she keeps the television on sometimes for company?

"I'm thinking probably in terms of where I live alone," she said, "my next door neighbor lives alone, so we probably are on the computer a fairly decent amount of time. And the TV is probably on more. And I just wondered if those particular things use a lot or not?"

"A good rule of thumb is the appliances that use the most electricity are the ones that you are going to be heating or cooling with," Durand said. "So, your refrigerator. Pay attention to that. Make sure it's full, even if it's full of water. Make sure it's full."

Durand tells Meehan about things like phantom power, when plugged-in phone chargers, gadgets and appliances can draw electricity from the grid unnecessarily. Whether or not she shuts off her computer or television, he says, is a personal choice.

But Meehan is interested in that comment about the water in the refrigerator.

"You said something about keeping the refrigerator full," she said. "Explain that to me."

"What you're doing with a full refrigerator is you're keeping the items inside it cold," Durand said. "What you're doing with an empty refrigerator is you're keeping the air inside your refrigerator cold. So when you open the door, the air is going to escape, the cold items don't. So it's something that if you have it full, you can open the door and understand that you're not going to be losing as much cold out of that refrigerator because everything in it is kept at that temperature."

So what can Meehan do to save even more money on electricity? Durand turns over her electric bill and points to a charge that everyone pays -- residents and businesses -- it goes towards energy efficiency programs. Energy experts say improving efficiency across the region is key to keeping prices down.

"If you look at the breakdown of what's referred to as delivery services on your bill, the very last one is energy conservation," he said. "It's based on the kilowatt hours that you use. So in this case, it's costing Barb about 51 cents per month."

With that charge, Meehan already has paid for an energy expert to come to her home and evaluate its efficiency. She just has to call and schedule it. They'll go through the house, and if there's work that needs to be done -- like installing new insulation, there are rebates available to help pay for the work. They'll also give her free LED lightbulbs and digital thermostats, if she needs them.  

"I really would like to have the efficiency thing," she said. "I just bought one of the energy efficiency bulbs. The problem there is they're so expensive. So its kind of like, 'Okay, I can buy one every couple weeks, so I can have them for the whole house.'"

"There's a common saying that if you buy an LED bulb when a baby is born, you'll have that same bulb when the baby goes to college," Durand said.

"Oh, my god! But if they last that long, it's worth it," Meehan said.

In the 45 minutes looking at her bill with Durand, Meehan says she learned a lot. She didn't know she could pay a little bit more to get a percentage of her energy from renewable sources. She also didn't know that she can be placed on a monthly budget plan, or that some lower income people qualify for a roughly 25 percent discount. She's also eager to get that home efficiency audit done, because she really wants to get her hands on those LED light bulbs.

This is the fourth report in a 10-part series about our energy system, called, “Power Source: Where People and Energy Connect.”

Listen to other stories in this series.