Home heating costs will skyrocket in RI this winter. Here's how much your bill could go up

+15%

Annual rise expected

in typical gas bill

... on top of ...

+50%

Annual rise expected

in typical electric bill

* Based on requested rate increases

PROVIDENCE – The same market forces that are pushing up the prices of electricity and liquid fuels are now set to raise the cost of natural gas for home heating in Rhode Island.

Rhode Island Energy, the state’s sole gas supplier, filed a request with utilities regulators late Thursday for a rate hike that would raise the annual bill for a typical residential customer that uses 845 therms by about 15%, or $227, to $1,742. The average small-business customer would see a similar percentage increase under the proposal for the 12-month period starting Nov. 1, according to the filing submitted to the Public Utilities Commission.

The increases are driven largely by the war in Ukraine, which is raising demand for liquefied natural gas, according to the company. While Rhode Island and the rest of New England get most of their gas from pipelines, imports of LNG are crucial to meet demand on the coldest days of winter.

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“We recognize that higher gas prices create additional challenges for Rhode Island families,” said Rhode Island Energy president David Bonenberger. “We encourage customers who may be struggling with higher energy bills to contact us before getting behind. Rhode Island Energy has programs that can help.”

Those options include energy efficiency programs that offer incentives to home and business owners who want to make improvements to save on heating and electric usage. They also include payment plans and billing assistance.

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Another alternative under consideration is the use of $17.5 million in bill credits for gas customers that Rhode Island Energy parent PPL agreed to when it purchased Narragansett Electric this spring.

Rhode Island Energy is the largest utility in Rhode Island, with about 770,000 gas and electric customers.

Heating oil expected to cost more, too

More than half of Rhode Island households heat with natural gas. A little less than a third use heating oil, about 10% rely on electricity, and a small fraction get propane deliveries. Prices for all those energy sources are inflated.

Residential heating oil prices climbed steadily nationwide last winter before cresting at $5 a gallon in March, nearly double the highest prices of the previous winter, according to the U.S. Energy Information Administration. The average price in Rhode Island followed a similar trajectory, climbing to $4.88 a gallon before easing a little, according to the state Office of Energy Resources.

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Neither agency collects retail data in the late spring and summer, but there are signs that prices are still high. The wholesale price at New York Harbor dropped over most of the summer, but it’s been rising again in recent weeks. Heating oil futures prices increased to about $4 a gallon last week, about $1.90 higher than the same time last year, according to the EIA.

Electricity prices also to increase because of international events

While there’s still some uncertainty about heating oil prices, there’s next to none when it comes to electricity; rates will be higher come Oct. 1.

Rhode Island Energy filed a rate hike request with regulators in July that would see most monthly electric bills in the state climb by nearly 50%. At 17.8 cents per kilowatt hour, the residential rate would be the highest on record going back at least to 2000. It’s more than double the rate currently in effect. The commercial rate will be 18.3 cents per kilowatt hour. 

While rates always go up from summer to winter, the coming increase is unprecedented and is being caused by worldwide demand for fossil fuels and the market turmoil tied to the war in Ukraine.

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Rhode Island is part of the New England electric grid, a system that is dependent on natural gas as a source of power generation. With Europe looking for alternatives to Russian natural gas, prices for the fossil fuel have spiked globally.

Rates have already gone up in other parts of New England, and some utilities have proposed even higher increases for the winter than those requested in Rhode Island.

The same factors putting pressure on electric prices are affecting prices for natural gas used for heating.

“This is not a normal year,” Paul Hibbard, a consultant with the Analysis Group, wrote in testimony in support of the gas proposal filed by Rhode Island Energy. “The impact of the Russian invasion of Ukraine has fundamentally changed international markets for natural gas, including LNG. The increased demand for global supplies of natural gas from Europe has increased the price of natural gas throughout the U.S. and in much of the world, resulting in increasing exports from the U.S. to Europe and increasing the cost of securing LNG supplies for the LNG import terminals serving New England.”

What’s next?

The Public Utilities Commission is set to hold a hearing Sept. 16 on the electric rate proposal.

Because energy costs reflect wholesale prices and are passed on to consumers without a mark-up by the utility, there is little doubt that the commission will approve the rate hike. But it has the option of spreading the cost out over a longer period to moderate the impact on ratepayers.

As for the natural gas rate proposal, the commission has yet to schedule a hearing.

This article originally appeared on The Providence Journal: Electric and natural gas rate hikes in RI will skyrocket heating cost