Historical Electric Rate Information

Typically, residential energy service rates are set twice a year through rate cases filed at the Public Utilities Commission. These filings are made by the individual electric utilities. Although not common, rates can sometimes change more or less frequently. You can see this from Table 1 below, where rates changed three times in 2008, 2012, and 2018. Rates will go up and down year to year and will change depending on the time of year. Table 1 below shows all of Eversource’s historical Rate R Residential electricity rates beginning with 2005.

The table shows the total rate and also shows the components that make up the total rate.  These components include the supply (a.k.a. energy service) charge, the transmission charge, the distribution charge, and “other” charges which includes the stranded cost recovery charge, system benefits charge, and electricity consumption tax. This table does not include customer charges or meter charges.  To read more about these charges, see this page.

Figure 1 below shows how rates have changed over the past 14 years along with a trend line. The trend has been for rates to increase. Over the most recent 14-year period, the increase has averaged about 2% each year. Please keep in mind that past history is not necessarily a predictor of future trends.

 

What to Consider If You Are Thinking About Solar

If you are thinking about a solar electric system (or PV system), one available financing option is a Power Purchase Agreement (PPA). The information below is about escalation clauses often found in a PPA.  For a complete overview of PPAs, check out “A Homeowner’s Guide to Solar Financing ”.

What is an escalation clause and how does it work?

Many solar PPAs include an escalation clause. An escalation clause increases the price per kWh you pay for the energy your solar system produces. Escalation is calculated each year at a compounding rate (%), adding the increase for the year to the prior year’s kWh price to calculate the price for the next year. Payments tend to escalate between 1% and 3% per year for many solar PPAs. Keep in mind that in New Hampshire the 10 year historic trend for electricity rates has been an increase of approximately 2% each year but that past history is not necessarily a predictor of future trends.

What can I use as a benchmark when evaluating the escalation percentage? 

The tables below help explain how escalation works. Table 2 shows what could have happened over the past 14 years at different escalation rates. The starting point is the known electricity rate from 2005. This value is then projected out with a 1%, 2%, 3%, and 4% escalation rate. You can see from the table that a 2% escalation rate ends up with an electricity rate close to today’s rate.

Table 2: Historical rate escalation projections from 2005-2019 (Base rate=$0.14)

Check out Table 3 to see what electricity rate paths might look like over the next 10 years. The starting point is the known Eversource total retail electricity rate from February 2019. If rates continue to increase by 2% each year, then the total retail electricity rate in 2029 would be approximately $0.22 per kWh.

If you are thinking of using a solar PPA as a way to afford a solar energy system and are wondering how the escalation clause in the PPA is reasonable, it may be helpful to use a table like the one below to see what rates might look like over the term of the contract.

Remember, rates go up and down year to year and, within any given year, will change depending on the time of year. These projections are in no way a guarantee of future rates. They are merely a guide to show how escalation works and to help customers considering a PPA determine evaluate the proposed escalation rate.

Table 3: Hypothetical rate escalation projections from February 1, 2019-2029 (Base rate=$0.18149)