LI utility bills to spike by nearly $17 in January

Average residential customers will see a $16.91 increase Average residential customers will see a $16.91 increase in their bills next month because of an anticipated jump in natural gas pricing, and a backlog of unpaid fuel costs from November, LIPA said. (Jan. 11, 2013) Photo Credit: Newsday / Karen Wiles Stabile

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The new year will bring a new electric utility to Long Island -- and an unrelated spike of nearly $17 for typical January electric bills.

Average residential customers will see a $16.91 increase in their bills next month because of an anticipated jump in natural gas pricing, and a backlog of unpaid fuel costs from November, LIPA said. LIPA is still managing utility rates even as PSEG-Long Island takes over management of the system Wednesday.

The hike will appear as an increase in the power-supply-charge portion of customer bills. The charge, which reflects the cost of fuel and energy purchases, represents about half of LIPA bills. The other half, known as the delivery charge, is to be frozen until January 2016 as part of Gov. Andrew M. Cuomo's LIPA reform act.

All customers are affected because most Long Island electric plants contracted to LIPA operate using natural gas.

In a statement, LIPA said the power-supply charge increase stems from a projected 51 percent increase in the cost of natural gas next month. For utility customers, it means the power-supply charge goes from 0.08729 cents a kilowatt hour to 0.1091 cents. The 2.2-cent increase exceeded all one-month increases in 2013, according to LIPA figures. The charge rose as many times as it fell this year -- six each -- with a 3-cent drop between September and October.

The power-supply charge fluctuates month to month, along with LIPA's costs. That is a change from prior years when LIPA recalculated the charge annually or quarterly -- and sometimes vastly overestimated it. LIPA was then required to return the overage the next year.

Natural gas prices, though relatively low because of large supplies, tend to spike in January as demand rises during the winter heating season. LIPA said natural gas prices are projected to increase to $7.37 per dekatherm in January, from $4.86 in December.

According to the U.S. Average Natural Gas Price Index, the price stood at just under $4 on Dec. 1, and has climbed to $4.43 this week, but those prices don't include LIPA's pipeline transportation costs or local delivery charges LIPA must pay.

LIPA said the power-supply charge increase also includes about $34 million in "unrecovered" fuel costs from November. In an email, LIPA explained that while it forecasts the price of fuel for the coming month, "all costs are ultimately trued-up to actual costs," which sometimes results in a positive or negative balance.

The $34 million undercollection comes even though LIPA increased the charge each month starting in October, after the September drop. The power supply charge declined from April to July in advance of the passage of the LIPA reform act, despite the utility's being some $191 million over budget on fuel and power costs during the period, according to LIPA figures.

LIPA noted that carry-over charges in the monthly scheme are "significantly smaller than they were when the power supply charge was calculated on a quarterly or annual basis."

In March, another new charge will appear in electric bills relating to a recent $2.1 billion debt offering by the LIPA-affiliated Utility Debt Securitization Authority.

The new charge will amount to just under $10 a month for average customers, but there will be an offsetting amount elsewhere on the bills of around $11, reflecting a savings of around $1 a month under Cuomo's LIPA reform legislation.

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