Beatrice Lang
New Hampshire's electricity rates are increasing due to several factors, including the state's reliance on natural gas for electricity generation and heating, with increasing gas prices driving up costs. The state's energy market deregulation in 1996 has also contributed to rising rates, as it has increased competition and allowed residents to choose their suppliers, leading to potential fluctuations in pricing. Additionally, New England's energy policies and net-zero mandates have influenced electricity costs, with anti-pipeline policies and artificial demand for renewables impacting the price of energy in the region. These factors have resulted in New Hampshire residents facing higher-than-average electric bills, with the average monthly cost being $239, and the average rate being 25 ¢/kilowatt-hour (kWh).
| Characteristics | Values |
|---|---|
| Average monthly electric bill | $239 |
| Average yearly electric bill | $2,868 |
| Average electric rates | 25 ¢/kilowatt-hour (kWh) |
| Average electricity consumption | 966 kWh per month |
| Average yearly electricity consumption | 11,592 kWh |
| Projected 25-year cost of electricity | $150,700 |
| Average cost per kWh | 22.97 cents |
| Direct Energy's Go Green Lights 24 plan cost per kWh | 16.39 cents |
| New Hampshire Electric Cooperative's rate per kilowatt hour | 8.6 cents |
| Liberty Utilities' proposed rate per kilowatt hour | 22.23 cents |
| Percentage increase in electric bill | 47% |
| Average monthly electric bill after rate increase | $220 |
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What You'll Learn
High natural gas prices
New Hampshire is facing rising electricity prices due to high natural gas prices. New England, where the state is located, relies on natural gas for electricity generation and heating homes and businesses. As a result, the increasing prices of natural gas are having a knock-on effect on electricity rates, with some providers planning to double their prices per kilowatt-hour.
The price of natural gas has soared in recent times, with some prices reaching $8.78 per million British thermal units in May 2022, the highest they have been since 2008. Projections show that these prices could more than triple to $30 per mmBtu. This is a stark contrast to the previous decade, where low natural gas prices kept energy costs relatively stable.
The high prices of natural gas are particularly notable during the cold winter months, when there is increased demand for natural gas in home heating. The proposed rate increases come after an expensive winter heating season, indicating that energy costs will likely remain a challenge for New Hampshire residents in the upcoming winter.
The state's utilities are passing on the high costs of natural gas to consumers, with Liberty Utilities, for example, proposing to increase the per-kilowatt-hour price of electricity from 11.11 cents to 22.23 cents. This change would result in a typical household experiencing a 47% increase in their electric bill, according to consumer advocate Don Kreis. Kreis expects the commission to approve the proposed rates, as they follow the standard process for adjusting electric rates.
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Cold winter months
New Hampshire experiences cold winter months, and the demand for natural gas for heating is high during this period. Natural gas is used to produce electricity in New Hampshire, and when the demand for heating increases, the amount of natural gas needed for heating can take up most of the capacity in the pipeline delivering natural gas to New England. This leads to a decrease in the supply of natural gas for electricity generation, causing the price of the remaining natural gas to increase. As a result, the cost of producing electricity goes up, and these increased costs are passed on to electric customers in the form of higher electric rates.
The high electric rates in New Hampshire during the cold winter months are also influenced by the state's cold climate and distance from cheap fuel sources. New Hampshire's cold climate leads to increased electricity usage for heating, contributing to higher electric rates. Additionally, the state's distance from cheap fuel sources, such as Louisiana, results in higher intrinsic energy costs compared to other regions.
The global energy market volatility, including the war in Ukraine and the recovery of the economy from the COVID-19 pandemic, has also contributed to rising energy prices worldwide. These factors have led to uncertainty in energy supplies and growing inflation, impacting the cost of energy in New Hampshire.
Moreover, the recent trend of extremely cold temperatures across the country has further strained fuel supplies, resulting in even higher prices. The increased demand for natural gas during the cold winter months in New Hampshire contributes to the overall rise in energy prices.
To conclude, the combination of high demand for heating, the reliance on natural gas for electricity generation, the cold climate, distance from cheap fuel sources, and global energy market volatility all contribute to the increase in electric rates during the cold winter months in New Hampshire. These factors result in higher electricity costs for residents, who must prepare for higher electric bills during this period.
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Fossil fuel reliance
New Hampshire's reliance on fossil fuels is a significant factor in the rising electricity rates. The state's electricity generation still depends on fossil fuels, particularly natural gas, which accounts for nearly 25% of its total electricity generation. While renewable energy sources, such as hydroelectric power, biomass, wind, and solar, contributed 18% of the state's total generation in 2023, the majority of New Hampshire's energy mix still comes from non-renewable sources.
The state's vulnerability to price spikes is exacerbated by its high reliance on fuel oil for home heating, which accounts for one-fifth of state petroleum use. This has resulted in New Hampshire residents paying higher-than-average electricity bills, with an average monthly electric bill of $239, which is 6% higher than the national average.
In addition, New Hampshire's transportation sector, dominated by gasoline and diesel fuel sources, accounts for just under a third of the state's total energy use. The state's annual consumption of gasoline and diesel is approximately 741 million and 103 million gallons, respectively. While the popularity of electric vehicles is growing, the state had only 250 public electric vehicle charging locations in August 2024, the fewest in New England.
The state's dependence on natural gas and other fossil fuels for electricity generation and heating has led to a proposed rate increase by Liberty Utilities, which would double the price of electricity. This price hike is driven by the projected high costs of natural gas, which has already reached $8.78 per million British thermal units in May 2022, the highest since 2008. As a result, a typical household would see a 47% increase in its electric bill.
To reduce their reliance on fossil fuels, New Hampshire residents can consider investing in solar energy systems. By installing a solar system, residents can reduce their electric bills and take advantage of local solar incentives. Additionally, the state has abundant renewable energy resources, including hydroelectric power, biomass, and wind energy, which can be further developed to decrease dependence on fossil fuels.
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Energy market deregulation
Energy markets were regulated across the United States until the end of the 20th century, with state-controlled utility companies acting as the sole energy suppliers of electricity and natural gas within regional boundaries. Energy deregulation involves eliminating these regulations surrounding energy markets and how power is delivered to customers.
Energy deregulation was initiated by President Jimmy Carter in 1977 as a solution to the energy crisis of the 1970s. His five-part National Energy Act was signed into law in 1978, paving the way for the reorganization of the energy industry. This act created a new type of energy producer known as the Exempt Wholesale Generator (EWG), allowing for private market competition within the energy sector.
In deregulated markets, utilities are prohibited from generation and transmission ownership and are only responsible for distribution, operations, and maintenance from the point of grid interconnection to the meter, as well as billing ratepayers. Independent suppliers are given the right to sell energy on the open market, with utility companies providing access to transmission lines and pipelines. This prevents the redundant construction of new transmission routes.
Energy deregulation has resulted in more power providers, lower prices, and increased competition. However, it has also led to challenges in financing power plants, as utilities and customers are now free to purchase power from any supplier. Additionally, it has created uncertainty regarding the construction of new power plants, as the power generated may not be competitive with market rates.
While Texas is the closest to full deregulation, California, Rhode Island, New York, Pennsylvania, and Massachusetts were among the first states to adopt deregulation in 1999. New Hampshire also experienced energy deregulation in 1996, and the recent increase in electricity prices can be attributed to the high costs of natural gas, which is heavily relied upon in New England for electricity generation and heating.
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Rising electricity demand
New Hampshire's electricity rates are rising due to an increase in electricity demand, driven by higher costs of natural gas, which is used to generate electricity and heat homes. The state's deregulated energy market, while intended to increase competition and lower prices, may have contributed to the rate hike as providers pass on higher wholesale costs to consumers.
The average New Hampshire resident spends about $239 per month on electricity, with an average rate of 25 cents per kilowatt-hour (kWh). This is expected to increase, with one utility company proposing to double its rates, from 11.11 cents to 22.23 cents per kilowatt-hour. This price increase will significantly impact households, with a projected 47% increase in electric bills.
The rising electricity rates have been attributed to the high costs of natural gas, which is essential for electricity generation and home heating in New Hampshire. The state has experienced an expensive winter heating season, and the highest natural gas prices since 2008, reaching $8.78 per million British thermal units in May, with projections of a further increase to $30 per mmBtu.
In addition to the direct impact on household budgets, the rising electricity rates may also affect businesses and the overall economy of the state. Businesses that rely heavily on electricity may face higher operational costs, which could be passed on to consumers or impact their profitability. The energy-intensive industries, such as manufacturing, may be particularly affected, potentially influencing their investment and employment decisions.
To mitigate the impact of rising electricity rates, residents and businesses in New Hampshire can explore energy-efficient practices and alternative energy sources. This includes adopting renewable energy plans, installing solar systems, and reducing overall energy consumption. By decreasing their reliance on traditional fossil fuels and embracing innovative solutions, consumers can help lower their electricity bills and contribute to environmental sustainability.
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Frequently asked questions
New England depends on natural gas to generate electricity and heat homes and businesses. The price of natural gas has been increasing, driving up the costs of electricity.
The price hikes are being driven by projected high costs of natural gas. One of the state’s major utilities is set to double the price of electricity.
The supply rate for electricity changes twice a year, in August and February. The price increases are expected to come into effect in August.
A household currently paying $150 per month would see their electricity bill increase to $220 per month. That's a 47% increase.
You can reduce your electricity bill by using less electricity or by reducing the cost of your electricity (e.g. by installing a solar system).
