That summer electric rate drop won't last: RI's rates will be back up next winter. Here's how much.

PROVIDENCE – Most Rhode Islanders will almost certainly see a drop in their electric rates in the next couple of weeks, but they may want to hang on to their savings to help pay next winter’s bills.

How much will RI's electric rates go up in winter?

While Rhode Island Energy, the state’s dominant electric provider, is asking state regulators to approve a big rate reduction that would take effect from April 1 to Sept. 30, the company is already projecting that rates for the period from Oct. 1 to March 31, 2025, could climb as high as those in the last two winters.

That could push the residential rate up to 17 or even 18 cents a kilowatt hour, according to filings Rhode Island Energy recently submitted to the state Public Utilities Commission.

If it does get that high, the rate would match the record levels from the winters of 2022-23 and 2023-24, when inflation and global demand for natural gas boosted electric rates across New England.

Why do electric rates drop in summer and rise in winter?

The price of natural gas is the primary driver behind electric rates because the region is heavily dependent on the fossil fuel to generate electricity.

Even as more renewables were being developed, they still supplied only 12% of the power managed by Independent System Operator New England last year. Natural gas, on the other hand, generated 55% of the regional grid’s power.

Because of that dependence, electric rates in Rhode Island in recent years have followed a predictable pattern, rising in the winter when overall demand for gas, from both the heating and electric sectors, goes up, and then falling in the summer when heating needs drop off.

Last two years have seen higher rates than usual

But over the last two years, the highs have been higher than usual and the lows haven’t been as low.

For the period starting April 1, Rhode Island Energy proposes lowering the residential rate for what’s known as last-resort service from 17.7 cents a kilowatt hour to 10.4 cents. For the typical customer that uses 500 kilowatt hours a month, that translates to a 40% bill decrease.

Though the new rate would be substantially lower than what’s currently in place, it’s still at least 30% higher than the summer rates in the years before natural gas prices went up.

Even though gas prices have leveled off, Rhode Island Energy customers are still feeling the effects because of the way the utility buys power. The company is required by the Public Utilities Commission to stagger energy purchases to reduce customers’ exposure to price volatility.

So far, it has signed contracts for half the power it needs for next winter. And some of that power was bought as far back as January 2023.

If the prices in the remaining contracts that have yet to go out to bid are similar to those in the contracts already signed, the final electric rate could be on the higher side, according to Rhode Island Energy’s calculations. And if current forward prices hold, the final rate would be lower.

This article originally appeared on The Providence Journal: RI's electric rates will rebound next winter to previous highs