The state Public Service Commission is authorizing a $32 million temporary credit for National Grid that will prevent an electric rate increase next month due to the exceptionally cold winter the nation is experiencing.
A surge in prices had been expected in February because of unprecedented winter demand for electricity, PSC officials said — and because the cold weather has increased problems for plants that generate electricity.
Earlier this month, New York set a winter peak electrical demand record of 25,738 megawatts, beating a 10-year-old record. Demand remains high while the cold spell continues, according to the New York Independent System Operator.
“The unusually cold weather that has gripped the region has caused energy supply prices to surge in New York state and throughout the Northeast,” PSC Chairwoman Audrey Zibelman said.
The $32 million credit approved by the PSC is intended to offset what could have been a 27 percent increase in the price paid by National Grid customers in February.
The credit will keep total rates in February the same as in January.
National Grid is the largest utility in the Capital Region and across upstate, serving 1.3 million upstate households and businesses.
“These millions of dollars in temporary credit will help upstate New Yorkers and small businesses, who may already be struggling to pay their bills, offset some of this cost,” Zibelman said.
The increased cost for electricity will be absorbed by National Grid for now and recovered from customers later, spread over a number of months.
National Grid’s electricity price already went up nearly 50 percent in January, and the company approached the PSC about a credit last week, after realizing there would be another spike in February, said company spokesman Patrick Stella.
“We were hearing a lot from customers about the higher rate,” he said.
While electricity customers across the state are facing higher-than-normal bills due to the unusually cold weather, the PSC said National Grid’s increase had been expected to be much higher than that for other companies. Stella said that’s probably because many generating plants National Grid buys from rely on natural gas, which has also spiked in price nationwide due to the Arctic-influenced cold being felt as far south at Louisiana and Georgia.
NYISO, which manages the upstate power supply from offices in Rensselaer, noted extremely cold temperatures cause a number of problems for power generators and utilities: equipment problems, icing in rivers that reduces the capacity of hydroelectric plants and higher costs for natural gas.
“In the winter, the millions of retail residential, commercial and industrial gas customers served by local utilities have priority on the pipeline system to meet heating and commercial needs. The high demand for natural gas during periods of extreme cold weather over a large portion of the country can reduce the availability of natural gas for power plants,” NYISO officials said in an earlier statement.
The PSC plans to review National Grid’s hedging practices and retail rate mechanisms, Zibelman said, to avoid spikes in the future.
Forecasts were that a typical residential customer using 600 kWh would have seen an increase of between $12.75 (17.6 percent) and $29.74 (27.2 percent), depending on their location, according to the PSC. Small businesses would have seen similar percentage increases.
Zibelman said utilities across the state are being urged to promote the advantages of year-round budget plans, which spread out the cost of winter and summer price spikes.