new$england$electricity$rates$analysis$ -...
TRANSCRIPT
New England Electricity Rates Analysis
Prepared for NESCOE September 2015
Reishus ConsulBng LLC
Preliminary insights
• ResidenBal electricity customers in New England states have paid higher rates than those of the naBonal average over the last decade. – The most significant factor that drives differences in rates paid by residenBal customers
across the US is the underlying fuel mix of the power supply that customers purchase. – New England as a region derives relaBvely less of its power from cheaper sources of
generaBon – especially coal, nuclear, and large federal hydro projects -‐-‐ than many other regions in the US.
• Over the last decade, the level and volaBlity in the price of natural gas that fuels a significant
porBon of power generaBon explains much of the movement of power prices in New England year over year, but it is a complicated relaBonship. – The share of natural gas fired generaBon is increasing at a Bme when natural gas prices
have generally fallen to their lowest annual average in years, yet natural gas has also spiked to extremely high but short-‐lived prices during recent periods of supply constraint.
– ResidenBal customers are generally not directly exposed to real-‐Bme wholesale spot electric prices, which closely track natural gas prices delivered to electric generaBon plants, but over Bme they will see those spikes incorporated into seasonal or average generaBon rates.
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Preliminary insights, conBnued
• Other factors also drive trends in residenBal electricity bills, including: – The amount of electricity consumed on average by residenBal customers, which varies
across states and uBliBes, and is correlated to factors such as the size and income level of the average household, and the level of electric heat and air-‐condiBoning penetraBon
– Specific regulatory and corporate policies that may impact the cost of uBlity distribuBon operaBons that are passed on to customers, such as relaBve levels of uBlity spending on specific programs related to smart meters or tree trimming to improve reliability,
– Regulatory rate design choices that spread the uBlity’s allowed revenue requirement across different classes of customers or provide for Bme-‐differenBated rates,
– Statewide policies, such as those establishing rules or targets for long-‐term contracts, renewable porTolio standards, and energy efficiency programs.
• The non-‐generaBon porBon of rates, i.e., distribuBon and transmission, has been slowly but steadily increasing over Bme, driving up total bills to residenBal customers.
• Purchased power contracts are sBll a relaBvely small porBon of the total generaBon mix in New England; their impact on rates is difficult to assess because of the lack of publicly available data.
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Historical average residenBal rates of selected New England uBliBes (2003-‐2013)
Source: EIA
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cents/kWh
ConnecBcut Light & Power Massachusecs Electric Central Maine Power Public Service Co of NH
The Narragansec Electric Green Mountain Power New England Average US Average
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Rates, which have been rising modestly over the period, are comprised of generaBon, transmission and distribuBon components. T&D rates have been steadily increasing, while generaBon rates, afer increasing quickly in the first half of the period, have moderated somewhat , although sBll remain volaBle.
Historical average residenBal rates of New England and of two comparable east coast uBliBes (2003-‐2013)
Source: EIA
0
2
4
6
8
10
12
14
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18
20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cents/kWh
US Average Massachusecs Electric Central Maine Power
Public Service Co of NH The Narragansec Electric Green Mountain Power
New England Average PSE&G Duke SC
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Calculated monthly bills paid by typical New England residenBal customers, based on regional average
consumpBon
Note: the monthly consumpBons are assumed to be same across uBliBes and equal to the average New England consumpBon of 648 kWh/month. This chart thus represents average monthly bills based on the region’s consumpBon average, and an annualized rate, which may not reflect actual seasonality in consumpBon or rates experienced by customers of these uBliBes. Source: EIA
$0
$20
$40
$60
$80
$100
$120
$140
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ConnecBcut Light & Power Massachusecs Electric Central Maine Power Public Service Co of NH The Narragansec Electric Green Mountain Power New England Average US Average
Bills are a funcBon of both rates and the amount of electricity consumed in a month.
6
Calculated bills paid by typical residenBal customers across uBliBes based on an average New England consumpBon level
Note: the monthly consumpBons are assumed to be same across the listed uBliBes represented by solid lines , i.e., based on the average New England level. For the data represented by the doced lines , i.e., PSE&G, Duke SC and the US average, the calculaBon is based on the respecBve average state level or naBonal average consumpBon. Also note that average sales among states actually varies considerably across the US; one significant factor is the level of air condiBoning load and total cooling degree days; naBonal average electricity consumpBon is higher than the New England average. Source: EIA
$0
$20
$40
$60
$80
$100
$120
$140
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ConnecBcut Light & Power Massachusecs Electric Central Maine Power Public Service Co of NH The Narragansec Electric Green Mountain Power New England Average PSE&G -‐ NENG consumpBon level Duke SC -‐ NENG consumpBon level PSE&G Duke SC US Average
7
Calculated bills paid by typical residenBal customer across New England (based on each state’s specific average annualized use)
Note: the monthly consumpBon level is calculated for each state based on sales and revenue data. The calculaBon is average esBmaetd annual rate ($/kWh) * average consumpBon in each state (kWh/month). Source: EIA
-‐
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ConnecBcut Light & Power Massachusecs Electric Central Maine Power Public Service Co of NH
The Narragansec Electric Green Mountain Power US average New England average
The spread of bills is larger here than in the previous charts because average customer kWh use does vary among the states; in the region, CT has the highest average and Maine the lowest average customer consumpBon. Seasonal variaBons however are not captured by this data; bills can and do vary in the course of a year based on differing monthly consumpBon pacerns of consumers in a given uBlity.
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Gross state product per capita growth for New England states has recovered since the last recession
Source: Bureau of Economics Analysis (BEA); data is nominal
CAGR 2003-‐2013 CT 2.8% MA 3.1% NH 3.0% RI 3.2% VT 3.2% ME 2.6%
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
CT MA NH RI VT ME
The large spread in average GSP/capita is a likely factor in differing average kWh consumed by residenBal customers in a given state.
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$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Nominal Gross state product per capita by state
The relaBve size of the current typical monthly residenBal bill varies somewhat across the New
England uBliBes
Note: 1) Monthly bill by average customer = current each uBlity rate in 2015 * 2013 New England average monthly consumpBon per customer 2) The value of Green Mountain Power represents an undifferenBated residenBal rate because of the unavailability of easily accessible public data of the component parts. Source: EIA, state PUCs & uBlity websites
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Central Maine Power
UniBl Energy Systems
Liberty UBliBes ConnecBcut Light & Power
Public Service Co of NH
Massachusecs Electric
Western Massachusecs
Electric
NSTAR Electric The Narragansec Electric
United IlluminaBng Green Mountain Power
The gray porBon of the bar esBmates the size of the non-‐generaBon, i.e. transmission and distribuBon, component of the bill. The colorful porBon of the bar represents an esBmate of the generaBon component of the bill for the indicated uBlity, except for GMP, whose bar represents the combined G,T&D bill.
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The generaBon and non-‐generaBon components of the current average residenBal power bill are roughly equal in size
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Central Maine Power
UniBl Energy Systems
Liberty UBliBes ConnecBcut Light & Power
Public Service Co of NH
Massachusecs Electric
Western Massachusecs
Electric
NSTAR Electric The Narragansec
Electric
United IlluminaBng
Green Mountain Power
Public Service Elec & Gas Co
Duke Energy Carolinas, LLC
Note: 1) Monthly bill by average customer = current each uBlity rate in 2015 * 2013 New England average monthly consumpBon per customer 2) The value of Green Mountain Power and Duke Energy Carolinas represent an undifferenBated residenBal rate because of the unavailability of easily accessible public data. Source: EIA, state PUCs & uBlity websites
The non-‐power supply porBon of residenBal rates has been generally trending upward over Bme
Note: For Massachusecs Electric, Central Main Power and Public Service Co of NH, EIA bundled residenBal rate is assumed to be roughly equivalent to the residenBal tariff., but is not a precise indicator of the non-‐generaBon porBon of rates. Source: EIA, state PUCs
0
0.02
0.04
0.06
0.08
0.1
0.12
ConnecBcut Light & Power Massachusecs Electric Central Maine Power Public Service Co of NH The Narragansec Electric
$/kW
h
2005
2006
2007
2008
2009
2010
2011
2012
2013
DistribuBon and transmission components of the non-‐generaBon rate include operaBng and capital costs for delivery of reliable service to the home, as well as items such as system benefit charges and stranded cost recovery.
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The generaBon component of rates exhibits more movement over Bme than other porBons of the electric price
Notes: 1) SBC refers to System Benefits Charge, 2) CTA refers to refers to CompeBBve TransiBon Assessment, in other states this component is ofen called stranded cost recovery, 3) "Other" includes ConservaBon Adjustment Mechanism and Federally Mandated CongesBon Cost Source: The ConnecBcut Public UBliBes Regulatory Authority (CT PURA)
0
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4
6
8
10
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14
16
18
20
1/2007 7/2007 1/2008 7/2008 1/2009 7/2009 1/2010 7/2010 1/2011 7/2011 1/2012 7/2012 1/2013 7/2013
Cents/kW
h
Historical residenBal rates for ConnecBcut Light & Power
GeneraBon Transmission DistribuBon SBC CTA ConservaBon Renewables Other
The direcBon in volaBlity of commodity prices is not always upward; the average annual cost of natural gas has been declining in the last five years afer increasing earlier in the period,. However, dramaBc short-‐term gas price spikes have also been experienced recently, although these spikes tend to be flacened somewhat n rates ulBmately seen by residenBal power consumers.
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-‐5
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015
ConnecBcut Light & Power
GeneraBon Transmission DistribuBon SBC CTA ConservaBon Renewables Other
Overall price volaBlity for residenBal customers is most closely linked to the volaBlity in the generaBon porBon of rates
Source: state PUCs
-‐5
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015
ConnecBcut Light & Power
-‐5
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015
The Narragansec Electric Company -‐ RI
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The price of natural gas delivered to electricity plants in the region has been especially volaBle in the past two years afer experiencing several years of significant declines in price
-‐
5
10
15
20
25
30
Mar-‐03 Dec-‐03 Sep-‐04 Jun-‐05 Mar-‐06 Dec-‐06 Sep-‐07 Jun-‐08 Mar-‐09 Dec-‐09 Sep-‐10 Jun-‐11 Mar-‐12 Dec-‐12 Sep-‐13 Jun-‐14 Mar-‐15
Dollars/M
MBtu
ConnecBcut Maine Massachusecs New Hampshire Rhode Island Vermont New England
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There is a close relaBonship between wholesale spot supply price of electricity and natural gas prices in New England
Note: residenBal power customers are generally not exposed directly to electric wholesale spot prices. Source: ISO-‐NE, December 2014 16
The generaBon component of rates can exhibit a significant seasonal difference that captures short-‐term volaBlity,
depending on the specific rate design in place for a given uBlity
Source: The Department of Public UBliBes, Massachusecs (MA DPU)
-‐20%
0%
20%
40%
60%
80%
100%
120%
0
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Cents/kW
h
Average residenBal generaBon component of rates for Massachusecs Electric Co
Summer Winter Change rate between winter and summer
17
Fuel diversity of power supply for New England, New Jersey, and South Carolina exhibit significant differences, especially in
the proporBon of coal, gas & oil in the generaBon mix
Note: For New England, hydro resources represent approximately 10% of the mix, and is grouped in the renewables secBon of the pie chart. Source: ISO-‐NE, uBlity 10k, state PUCs
18%
30%
45%
8%
NJ-‐Public Service Electric & Gas
6%
47% 33%
14%
New England average
Coal
Gas & Oil
Nuclear
Renewables
37%
21%
28%
14%
SC-‐Duke Energy Carolinas
NaBonally, the lowest cost US states have the highest proporBon of coal in their fuel mix
Some residenBal consumers have elected to be served by compeBBve suppliers, which may have different fuel diversity
profiles than the default service providers
Note: 1) Presented are latest available data: CT(2014), MA(2014), ME(2013), NH(2010), RI(2014), VT(2014), NJ(2014), SC(2014) 2) The state level data are shown in MA and RI charts. Source: EIA, uBlity 10K, LCIRP(PSNH), state PUCs; note that more research is necessary to determine if compeBBve providers have a significantly different fuel mix, such as a higher than average natural gas fired generaBon or renewables.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Massachusecs Electric Public Service Co of NH Central Maine Power The Narragansec Electric
Default % CompeBBve suppliers %
19
PorBon of total load served by default service providers versus compeBBve suppliers, conBnued
Note: 1) Presented are latest available data: CT(2014), MA(2014), ME(2013), NH(2010), RI(2014), VT(2014), NJ(2014), SC(2014) 2) The state level data are shown in MA and RI charts Source: EIA, uBlity AR & 10K, LCIRP(PSNH), state PUCs
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Public Service Elec & Gas Co Massachusecs Electric Public Service Co of NH Central Maine Power The Narragansec Electric
Default service CompeBBve suppliers
20
EsBmated share of renewable PPAs as a porBon of the total generaBon mix varies significantly in the region, but remains a relaBvely small porBon of the generaBon component to date
Note: ProporBon of PPAs is not precise, as a comprehensive data source was not available. Source: EIA, uBlity AR & 10K, LCIRP(PSNH), state PUCs
0% 20% 40% 60% 80% 100% 120%
The Narragansec Electric Co
Massachusecs Electric Co
Public Service Co of NH
Central Maine Power Co
Green Mountain Power Corp
PPA Non PPA
21
EsBmated share of renewable PPAs as a porBon of the total generaBon mix, conBnued
Source: EIA, uBlity AR & 10K, LCIRP(PSNH), state PUCs
0% 20% 40% 60% 80% 100% 120%
Duke
PSE&G
The Narragansec Electric Co
Massachusecs Electric Co
Public Service Co of NH
Central Maine Power Co
Green Mountain Power Corp
PPA Non PPA
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Notes on the analysis
• Six representaBve investor-‐owned uBliBes, one from each state that includes a major urban center, were included in this analysis: – Central Maine Power Co (CMP, owned by Iberdrola) – Green Mountain Power Corp (GMP) in Vermont – Public Service Co of NH (PSNH) – Massachusecs Electric Co (now NaBonal Grid) – ConnecBcut Light & Power Co (CL&P, now Eversource) – The Narragansec Electric Co (now NaBonal Grid) in Rhode Island
• Two east coast uBliBes, PSEG in New Jersey and Duke in South Carolina, are included in the analysis as useful comparisons. – While PSEG’s customers pay similar rates as those in New England, Duke’s customers pay significantly less, in
large degree because its power supply mix includes a substanBal porBon of lower-‐cost coal-‐fired generaBon.
• There is significant variaBon among the six states in regard to esBmated rates, and average bills, that customers paid in the period reviewed. Although the relaBve posiBon has changed over Bme, in general ConnecBcut has been the highest cost state over most of the past decade while other states have traded places for the lowest cost; currently Maine occupies that rank.
• Actual historical residenBal tariff data for each uBlity proved difficult to locate in this preliminary analysis, so the 10-‐year look back at rates and bills is esBmated from publicly available indirect data re sales and revenues, and thus should not be considered definiBve.
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