Hey New York,
We’ve got good news, and we’ve got bad news. We’ll get through the bad news first: New York, you’ve been over-paying for electricity, by a whole lot. In March, NY customers paid 18.26 c/KWh whereas the average American paid 11.59 c/KWh. The prices are even higher in New York City; there they are nearly double the national average.
Now, I understand that just about everything is more expensive in NYC. But a large piece of the high-cost puzzle comes from the variable rate pricing system in New York. We wrote a great article on this about three weeks ago, you can read it here.
All electricity is bought and sold in electricity markets before it gets to your house/ apartment. Because New York defaults on a variable rate, the rates fluctuate depending on supply and demand (think Econ 101).
This system has perks and downsides. The perks are that when weather is nice, there’s far less demand on the electricity grid, so nice weather = less expensive energy. However, when it’s hot and everyone’s AC is running on full blast, the grid is nearly full and market prices shoot up. With that said, this all pales in comparison to when there’s an outage on the electricity grid. I mean really, really pales in comparison.
This worst-case scenario happened this past Monday and we think NYC electricity users will soon be feeling the shock. The graph below is a visual representation of the “Real Time Rates” from NYISO.
To get an idea of a “normal” day, the rates typically hover between 40-55 $/MWh. They vary depending on usage, demand and supply.
On Monday, June 17, the Chateauguay-Massena transmission line, the hydroelectric pipeline that brings in electricity from Quebec, failed and reported an unplanned outage. The transmission line is 765-kilovolt and the electricity supply from Quebec fell from 1314 MW to 0.
An unplanned outage like that comes with serious side effects. The real-time rates skyrocketed from 40-45 $/ MWh to over $ 1500 per MWh.
So, at $40 per megawatt, that’s roughly $.04/ KWh, which is a fairly normal market price. However, when that volts up to $1500, that’s over $1.50 per KWh, or about 40X the normal price. So, anytime there is an unplanned transmission outage, you can expect a rate hike on your next bill…
But, New Yorkers, there still is good news, and it can help avoid these rate spikes.
In New York, you have the option of switching electricity providers and choosing a fixed rate plan. With a fixed rate plan, you aren’t subject to the peaks and valleys a variable rate brings. In fact, you pay the same amount each month and are insulated from these shocking market rate spikes.
If you’re interested in avoiding spikes in the markets and variable rates, you can do so here and avoid feeling like this: