October 2022 – Persistent inflation across the United States and worldwide continues to impact every aspect of daily life and every industry in the global economy.
NPU is not immune from these economic realities. The price of the electricity and natural gas that we purchase for our customers continues to increase, and like every other utility company in the United States, NPU is working to manage these increases.
Steps taken to mitigate increased costs of energy:
Electricity: NPU purchases its electricity from the Connecticut Municipal Electric Energy Cooperative (CMEEC). To provide stability in our rates, CMEEC purchases electricity through short-, medium- and long-term contracts. Without this ‘hedging’ strategy, NPU and its electric customers would have been exposed to an additional $13 million in costs for the coming winter, which would result in an increase of 68% in the largest component of our customers’ bills each month.
Natural Gas: NPU purchases natural gas for our customers through a similar hedging strategy; however, instead of transmission lines to move electricity, we must purchase capacity on pipelines that bring natural gas into New England from Pennsylvania, Texas, and the Gulf of Mexico. In 2014, NPU made an investment in additional pipeline capacity to allow us to secure lower-priced natural gas for our customers. This additional capacity will save our customers $2.4 million this winter and help our customers avoid increases of more than 30%.
Gross Receipts Tax on Natural Gas: Earlier this year, NPU worked very closely with our State Legislators to exempt our purchases of natural gas from the State’s Gross Receipt Tax. This proposal was included in the most recently passed State Budget and will save our customers approximately $975,000 a year.
Our utility rates include a Purchased Power Adjustment (PPA) and Purchased Gas Adjustment (PGA) that pay for the purchase of the electricity and natural gas used by our customers. NPU uses our Rate Stabilization Funds (electric) and cash reserves (electric and natural gas) to help us manage the fluctuation in our energy costs.
All of these elements are part of customer bills each month – and are critical to helping us provide stable rates for longer periods of time. Without a PPA and PGA, our rates would increase and decrease – sometimes significantly – each month. This would create unease for both our customers and our overall financial operations.
Therefore, NPU will be adjusting our PPA and PGA effective November 1, 2022, to account for the increased cost of the electricity and natural gas that we buy for our Residential and Commercial customers.
At this time, we estimate the following monthly impacts on an average residential customer bill, effective November 1, 2022, will be:
• Customer receiving four services: $36 increase (9.9%)* This is approximately $1.20 per day
• Customer receiving only natural gas: $15 increase (12.5%)* This is approximately 50 cents per day
• Customer receiving only electricity: $17 increase (12.5%)* This is approximately 57 cents
*These figures include the new rates approved by the NPU Board as part of a three-year rate track approved in 2020, effective November 1, 2022.
• Natural gas 2.3%
• Electric 1.0%
• Water .9%
• Wastewater 6.3%
For more than two years, NPU has worked to secure and provide direct financial assistance for at-risk customers through a variety of avenues, programs, and partnerships. This assistance includes:
NPU worked tirelessly to support customers experiencing financial challenges as a result of the pandemic:
• Our Special Payment Arrangement (SPA) program helped approximately 1,500 customers avoid $1.2 million in late payment fees
• More than $300,000 was provided to NPU customers participating in our Matching Payment Program
• We facilitated the payment of more than $2 million in support from TVCCA to help approximately 2,000 customers
• We secured and processed more than $310,000 in support through the State’s UniteCT program for 340 customers
• We secured nearly $50,000 from Operation Fuel to help 65 customers
• We worked with the City to secure more than $75,000 in support through the federal ARP program.
• As a result of the advocacy of Congressman Joe Courtney and his Norwich office, we worked with the City to provide $116,662 in support for 252 customers through Community Development Block Grant program.