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NStar Asks for Major Rate Hikes

Posted on: Sunday, 6 November 2005, 15:00 CST

By Peter J. Howe, The Boston Globe

Nov. 5--NStar yesterday proposed raising rates by 25 to 34 percent for its residential customers in Boston and 80 suburbs starting Jan. 1, as it became the latest utility to seek price increases as a result of soaring global energy prices.

Although NStar's proposed rate increase is in line with those of National Grid, parent of Massachusetts Electric Co., and other state utilities, NStar became the first utility to allege that profiteering and price-gouging -- not just higher natural gas and oil prices -- may be exacerbating the increases.

"We definitely feel that there are bad things going on in the marketplace," said Joseph R. Nolan Jr., NStar's senior vice president. Nolan and NStar are not specifically blaming any generating company or energy marketing company, but Nolan said, "These increases are not just reflective of increased fuel costs. There's a lot more to this story. It is not time to be price-gouging customers." Nolan said NStar hopes state and federal officials will take a closer look at whether price gouging is happening in wholesale electric markets.

NStar no longer owns power plants but shops for power for customers among energy companies. Big businesses and institutions also can sign contracts with energy providers and pay NStar only to deliver the electricity.

After soliciting many bids, NStar said the higher cost of power will increase the typical monthly bill for an average residential customer using 500 kilowatt hours monthly in the former Boston Edison territory by 34 percent, from $77.02 to $102.83.

In Cambridge, rates will rise 32 percent, from $76.64 to $101.31. And in the territory formerly served by Commonwealth Electric, on Cape Cod and south of Boston, rates will rise 25 percent, from $80.20 to $100.22.

Average increases for businesses, which typically pay higher rates than residential customers, could be as high as 60 percent, according to NStar spokeswoman Caroline Allen.

Although Boston Edison and ComElectric merged six years ago to become NStar, the two companies and the former Cambridge Electric unit of Commonwealth still file different rates because they have different power suppliers and power contracts.

Prices for all kinds of energy have soared since hurricanes Katrina and Rita ravaged the Gulf Coast oil and gas producing region, and US natural gas supplies from the gulf have been roughly half restored since before the storms. New England gets about half its electricity from plants that burn natural gas, so the soaring price of gas has driven big electric rate hikes, including a 28 percent residential rate increase that took effect for National Grid customers Tuesday. Some National Grid business customers on volatile month-to-month electric plans are facing increases of up to 80 percent by January.

NStar filed the rate increase last evening with the Massachusetts Department of Telecommunications and Energy, which is expected to approve it. DTE chairman Paul G. Afonso said the agency will hold several hearings to "explore why these prices are as high as they are," and to look in particular for ways to minimize the impact on low-income and elderly homeowners.

Asked to respond to Nolan's questions about price-gouging by generators or energy brokers, Afonso said, "I certainly would welcome any party to provide the department with any evidence about pricing that is not appropriate."

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NST,

Source: The Boston Globe

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