Energy price inflation is hitting home in New York, where electricity rates have shocked residents opening their utility bills.
For January, the bill for an New York City residence using 300 kilowatt-hours of electricity was $123.65 versus $82.80 in December, a 50 per cent increase, according to Con Edison, the local utility company. Spot market prices dropped from January to February but were still on average 79 per cent higher year over year, according to S&P Global.
New York is experiencing some of the most dramatic increases in a broad national rise in retail electricity prices, driven by a rebound in demand and an increase in the cost of natural gas burnt at power stations. The price of power is helping feed US consumer price inflation that is the highest in 40 years.
Across all of New York state, roughly 1.3mn residential customers are behind on payments worth $1.7bn, a historic record, according to the Public Utility Law Project of New York.
“It’s a terrible time for something like this to happen,” said Avi Singh, who owns a restaurant in Brooklyn. His electricity bill jumped 50 per cent from December to January.
Electricity bills are broken down into delivery and supply charges. While utility companies cannot alter delivery charges without approval from their regulator, supply charges are determined by the market.
Average supply charges for Con Edison jumped from $0.08 per kWh in December to $0.20 per kWh in January, similar to the increase in electricity prices on New York’s spot market.
Con Edison said that an increase in wholesale power prices driven by generators’ gas costs, as well as higher demand because of cold weather and their billing process, were the factors behind the recent rise in utility bills.
“We buy the energy on the wholesale market and provide it to customers at the same price we paid,” the company said.
In addition to the spot market, utilities buy contracted power in advance to help smooth price volatility. Con Edison said it would apply the full value of its contracted buying programmes to help reduce supply costs this month by about 9 cents a kWh, responding to a request from the New York Public Service Commission.
Approximately 14 per cent of Con Edison’s 3.4mn residential and commercial customers are more than two months behind on their bill payments. The total number in arrears has increased by 42 per cent since before the pandemic. Over 175,000 customers received “final termination” or disconnection notices in February, according to documents the utility sent to the NYPSC.
“There’s a lot that can happen from these unanticipated expenses,” said Diana Hernández, an energy insecurity expert at Columbia University, including potentially sending households into a “downward spiral” in which they cannot pay for food and rent.
New York state lawmakers have proposed at least $400mn in next year’s budget to assist households that are behind on utility payments. On March 1, Kathy Hochul, New York governor, announced a campaign to raise awareness about energy assistance programmes.
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But customers say the programmes are difficult to use and provide too little to cover the jump in electricity costs.
Jennifer Vargas, a Bronx resident, said the 50 per cent rise in her January Con Edison bill cancelled out the $25 Home Energy Assistance Program cheque she normally receives.
“I’m just going to have to put the credit cards together. I put it on the card or pay it late, because it’s a big difference I wasn’t anticipating,” she said.
Source: Financial Times