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Utility announces average rise of $10 a month for residential customers.
The effect of Hurricane Katrina and tighter natural gas supplies are boosting electricity costs for Central New York residential customers of National Grid by an average of $10 a month beginning in January.
Further increases, totaling an average $4.60 more per month, are coming in increments in April and January 2007. That's an average $14.60-per-month increase in January 2007's bill compared with December 2005's.
The state Public Service Commission Tuesday approved National Grid's request for the electricity increases a request that rocketed 265 percent from what was proposed in July: a $4-a-month increase in the average monthly bill by January 2007.
About two-thirds of the increase is because the commodity price of electricity has risen costs that National Grid has no control over. It charges for delivery, but passes the commodity price along to consumers.
National Grid, formerly Niagara Mohawk, blames the increase on the increase in natural gas prices costs that have also been a migraine for homeowners and businesses this winter. Some are seeing their natural gas bills doubling compared with a year ago.
Now electricity rates, usually delivered side-by-side on the same monthly residential bill, are rising.
"We didn't see a change in commodity prices coming," said Kerry Burns, speaking for National Grid in Syracuse. "We had a season of damaging hurricanes that increased natural gas costs."
Supplies of natural gas are tight, so the price has risen, nearly doubling in some sectors. At some plants, natural gas is used to generate electricity, so the cost of running those plants has increased. The record-high electricity supply costs are being passed along to customers.
Residential customers will see the $10-per-month increase on the "delivery adjustment" line item on their monthly electricity bill beginning in January.
Tuesday's approval by state regulators was two-pronged. In July, National Grid requested rate increases of an average of $2 a month for residential customers beginning in January, then another $2-per-month increase in January 2007. Those increases were requested to cover pension and retiree health-care benefits, environmental cleanup and changes in regulations.
Here's how that request changed and will take effect:
National Grid will raise residential rates an average of $10 a month in Central New York beginning in January. That's new. It's to cover rising electricity rates caused by damaging hurricanes in the summer and fall and tighter natural gas supplies.
The original rate increase request goes into effect in April moved back from January 2006 and in January 2007. In April, the average residential customer's bill rises $3 per month. It goes up another $1.60 per month in January 2007.
"What customers will see in January (2006) is strictly related to commodity prices," said Burns. "It's nothing we control."
Burns said it could have been worse. National Grid uses "hedges" including long-term fixed- and variable-rate contracts with suppliers and spot-market purchases to buy electricity.
"The average is a $10 increase, but it could have been as much as $17 (per month) if we didn't have contracts and other items in place," said Burns.
The January increase is for residential customers. Industrial customers are "primarily paying market prices already," said Burns.
"The impact for them is much smaller," she said.
Central New York is in the middle of the range for National Grid's January increase. Customers in Eastern New York are seeing an average residential rate increase of $15. Customers in Western New York are on the low end. Their average residential bills will rise about $5.50 per month.
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