Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.
By DONALD M. KREIS, Power to the People
New Hampshire might be the tenth most expensive state when it comes to energy. Or maybe not.
That’s the only inference I can draw from the latest effort to compare the cost of energy across the country, splashing across the headlines as I write. This time the culprit is Wallet Hub (which actually calls itself WalletHub, but I refuse to let corporations tell me when to use the space key).
Wallet Hub is run by self-proclaimed personal finance expert Odysseas Papadimitriou, a former executive with the credit card company Capital One. It’s a personal finance web site that offers free credit scores and makes money chiefly by pitching credit card offers to consumers, earning commissions when the pitches are successful. Apparently Wallet Hub strives to bolster its credibility by issuing various economic reports of potential interest to consumers.
Which brings us around to Wallet Hub’s claim that energy costs in New Hampshire are the tenth highest in the U.S. among the 50 states and the future state of Douglass Commonwealth (D.C.). Number 1 on the list is Connecticut; New Hampshire is also behind Massachusetts (#3) and Maine (#6) but just behind Rhode Island (#11) and Vermont (#14).
D.C., by the way, is the least energy-expensive jurisdiction in the nation, according to Wallet Hub. But whether that makes up for the lack of representation in Congress is not for me to decide.
Rankings like these are not to be taken lightly. States compete with each other for business and in-migration. The latter is important in northern New England because New Hampshire, Maine, and Vermont are rapidly becoming the equivalent of giant retirement communities.
People notice energy costs when they decide where to live or locate a business. States that are congenial only to retirees are not poised for long-term viability as economies or communities.
Policymakers notice rankings like these as well, brandishing them liberally. The high cost of energy in New Hampshire is inevitably hauled out as the basis for resisting efforts to achieve social or environmental progress on questions related to electricity, natural gas, or unregulated fuels like heating oil or gasoline.
That’s especially regrettable when it comes to ratepayer-funded energy efficiency since the NH Saves programs (oops! I should have typed “NHSaves”) trade short-term bill impacts for much greater long-term bill savings that inure to the benefit of all customers. By “all customers” I mean everyone, not just the people with the resources and savvy to add measures subsidized by NH Saves to their individual homes and businesses.
So, we should figure out whether Wallet Hub is right about New Hampshire. But we can’t, for several reasons.
First, kudos to Wallet Hub for not equating utility rates with utility bills. As to both electricity and natural gas, the report multiplies average rates by average consumption. That’s good because a state with relatively higher rates (e.g., because consumers are paying for energy efficiency programs) but low consumption (thanks to energy efficiency) gets credit for the economic benefits of energy efficiency.
But Wallet Hub’s figures for the average electricity rates in each state, obtained from the federal government’s Energy Information Administration (EIA), are now almost two years old and do not differentiate between residential and commercial rates. As the state’s advocate for residential ratepayers, I can tell you that commercial rates are (and should be) generally higher than what homeowners pay.
Nor does the data differentiate between customers who are still relying on their incumbent utility for electricity and those who exercise their right to buy electricity from an unregulated competitive supplier. That’s a problem – and one that will grow bigger in the future as Community Power Aggregation takes hold and ratepayers start saving real money via their municipal electric programs.
On the natural gas side, I flat out just do not believe Wallet Hub’s claim that New Hampshire is ranked Number 43 because the average monthly customer bill is just $20. Wallet Hub insists it got that number by multiplying average residential monthly consumption by the average residential rate.
The EIA reports that residential natural gas rates in New Hampshire are actually among the most expensive in the U.S. (as they should be, given our distance from sources of natural gas and a shortage of interstate pipeline capacity). Natural gas consumption by residential customers in New Hampshire is indeed very low, but that’s because natural gas service is available to a relatively small swath of the state. Though I can’t prove it, I think Wallet Hub simply missed that fact.
Wallet Hub ranks New Hampshire the nation’s second most expensive state when it comes to home heating oil, behind only Maine. At the risk of seeming mean-spirited, I secretly hope Wallet Hub has that one right. It suggests that heating customers are better off switching to a source that is rate-regulated by the Public Utilities Commission (i.e., electricity and natural gas) and, by the way, one that is also less carbon-intense than fuel oil.
The final component of the Wallet Hub ranking is the cost of motor fuel, i.e., gasoline and diesel. New Hampshire is ranked the 48th least expensive (i.e., the third cheapest) among the 51 jurisdictions. Gosh I hope that’s true as well. But, as everyone knows, prices at the pump are volatile and individual usage varies in a state with quite a range of rural and urban land-use and transportation patterns.
Ergo, caveat emptor. Sorry to lapse into Latin. What I am trying to say is that when it comes to energy cost surveys like this, approach with skepticism. And expect places with more extreme climates (e.g., New England with its cold winters) to suffer relatively high energy costs.
Also, think long term! Coastal New England is the Saudi Arabia of offshore wind, which will make a big difference if and when offshore wind becomes cost-competitive.
Finally, if you want energy data go straight to the EIA rather than allowing anyone else to filter it for you. There’s a vast supply of state-specific information on the agency’s web site. Surely that beats relying on a company whose business model is all about peddling you and your credit score to financial services companies that, in turn, make their money by subjecting you to the outrageously high interest rates associated with credit cards.
