The cost of flipping on the lights is about to hit its lowest rate since 2005 for most Cape Cod and Martha’s Vineyard electricity users, due in large part to a recent nosedive in natural gas prices.
The price for residential customers of the Cape Light Compact, an organization that buys power in bulk for most ratepayers on the Cape and Vineyard, will drop in July from 7.899 cents to 6.688 cents per kilowatt hour.
The lower rate means a savings of almost $8 on the bill of the Compact’s average residential customer who uses 650 kilowatt hours per month.
The new rates are about half a cent below what they were when the state’s electricity market opened fully to competition in March 2005, Cape Light Compact senior power supply planner Joseph Soares said.
The Compact, which buys its power from New York-based ConEdison Solutions, currently serves about 140,000 customers on the Cape and Vineyard, Soares said. The Compact also provides a variety of energy efficiency programs for Cape and Vineyard residents and towns.
Although the Compact has lost about 40,000 customers over the past seven years, Soares said the organization’s customer base has stabilized at between 140,000 and 150,000.
“We’re holding our own,” he said.
The most important thing for electric customers to do when choosing a supplier is to compare all of the terms of the various offers, Soares said.
Customers may not realize, for example, that long-term contracts can include an exit fee of more than $100, he said.
Long-term contracts may look great at first but may not compete with changes in short term offers, he said.
Recently there has been a flurry of complaints from customers saying they have been solicited over the phone by companies who use a variety of questionable tactics, Soares said.
These may include claims that the Compact has authorized the caller to switch customers to another service or that what the customer is agreeing to is not really a contract, he said.
And ratepayers should never give out their account number, Soares said.
“It’s like your social security number,” he said.
The reduction in power supply costs is largely a result of falling natural gas prices, Soares and ConEdison Solutions officials said.
Natural gas, which had reached between $15 and $16 per million British thermal units, now costs about $2.50, said Sam Morgan, northeast commodity sales manager at ConEdison Solutions.
“In New England, natural gas is the primary driver of electricity prices,” Morgan said.
Electricity supply prices have been coming down for a variety of reasons, including the discovery of large natural gas shale deposits in New York, Pennsylvania and Ohio, Morgan said.
The slow economic recovery has also dampened prices, he said, adding that the timing of supply purchases can also affect pricing.
Cape Light Compact customers are not the only ones saving on their electric rates. The state Department of Public Utilities earlier this month approved a rate for NStar’s basic service residential customers of 6.699 cents per kilowatt hour, more than a penny below the utility’s previous rate.
The impact of the low cost of natural gas has permeated the debate over other energy sources, including the controversial wind farm proposed to be built in Nantucket Sound.
During a public hearing on Cape Wind held Wednesday to take comment on a deal between the offshore wind energy developer and NStar for a quarter of the wind farm’s power both opponents and proponents of the project claimed the drop off in the cost of electricity generated by natural gas as support for their side of the decade-old debate.
Cape Wind opponents argue the cost of the project’s power to the utility is triple the cost of other power sources and that the decline in natural gas prices will only increase that gap. Supporters of the wind farm say that overall electric bills will be lower come July and the additional cost of Cape Wind will have a minimal impact on bills.
In a statement released Thursday, Massachusetts Energy and Environmental Affairs Secretary Richard K. Sullivan Jr. said that the impact of natural gas on electricity prices, while good for the consumer, should not be seen as reason to abandon investments in renewable energy projects.
“It is imperative we take advantage of this breather in energy cost increases to redouble our efforts to bring on line new clean energy sources that do not rely on dirty fossil fuels,” he said.
For a premium, both the Cape Light Compact and NStar offer electricity from wind and other renewable energy sources.