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Part Two: Understanding your Electric Bill

January 03, 2018:

Generation, Transmission, and DistributionIn the December 2017 edition of Energy Insights, we described various components of your residential electric bill and significant increases in both capacity and transmission costs, which are outside of HG&E's direct control. In order to keep pace with these costs, HG&E must increase rates by approximately 4.5% this month (less than $3/month for the average residential customer). In this edition, we would like to describe some of the progressive measures that HG&E has taken to protect customers from the full impact of these rising costs, and prevent an even larger increase.

As previously discussed, utilities throughout New England have to purchase enough capacity to meet the annual peak load plus a reserve margin, of which HG&E's share is approximately 63 MW (June 2017). HG&E has implemented an aggressive peak load management program, saving customers approximately $1.55 Million in 2017 alone. Without these initiatives HG&E's peak load last year would have been 72 MW, increasing capacity costs by $1.2 million and transmission costs by $350,000 (see capacity and transmission charts).

HG&E's peak load management plan and other cost saving activities include the following:

Demand Management –HG&E has invested in a variety of load reduction programs, including, initiation of local generation, forecasting peak periods, and investment in state-of-the-art technologies like battery storage. All load reduction programs have been developed to ensure that these assets are optimized during peak periods to effectively reduce peak load and associated costs.

Hedging –HG&E forecasts energy usage and market pricing in an effort to lock in lower costs for peak periods. This is a careful balance, by which HG&E's market analysis team aligns market conditions and load shaving activities to protect customers from sharp rate increases. Currently, power has been hedged through 2021.

Generation Ownership & Entitlements – HG&E owns a significant amount of hydro generation and also has entitlements to other power plants (Seabrook, Millstone, Wyman, Stony Brook) throughout New England, which help offset capacity costs (see capacity costs chart).

Transmission Ownership – HG&E owns and maintains 9.25 miles of transmission lines which are part of the regional transmission system and provide revenue to offset rising transmission costs (see transmission costs chart).

Automatic Meters – HG&E has implemented Automatic Meters which allow for more efficient management of usage and peak data.

Energy Efficiency (EE) – HG&E has developed innovative energy and cost saving programs that allow residential and commercial customers to cut costs while assisting in overall load reduction. Some of HG&E's EE initiatives include energy conservation programs, energy audits, rebates, and incentives.

Since 2008, residential electric rates have remained virtually unchanged because of HG&E's innovative rate stabilization approach. While we never want to raise rates, without these load shaving activities, HG&E would be forced to increase rates by more than double the current amount. The good news is, even with this increase to rates, you will find HG&E has the lowest rates in the region.

HG&E will continue to do our part to insulate you from the volatile energy markets and provide you with competitive rates, reliable service, and excellent customer service.

Transmission and Capacity Charts

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Contact Information

Kate Sullivan
Director of Marketing & Communications
Email | (413) 536-9333