Understanding Cape Cod Electric Rates

Cape Cod electric rates are among the highest in the country. As of December 2023, only Alaska, Hawaii, and Connecticut had a higher cost per kWh than Massachusetts. And Eversource, the utility that serves the Cape for electricity is expected to increase rates yet again in 2024 and throughoutt he coming years. 

A crucial first step if you’re looking to save money on electricity, is understanding how your utility company actually calculates your bill. It’s not as straightforward as you might think, and the power companies rarely make an “apples-to-apples” comparison easy for customers.  

But a clearer understanding of where your money actually goes might shed light on ways you can save, so in this post I’ll walk you through a typical Eversource bill and explain what the various charges are and what you might be able to do to lower some of them.

Cost per Kilowatt Hour

The basic unit of measurement for electricity is the kilowatt hour(kWh). Your monthly electricity cost is calculated simply by multiplying the number of kWh you used by the price per kWh that the utility company is charging.

If you consider that the average home in Massachusetts uses about 500 kWh per month, and the average electricity cost in Massachusetts is 21.11 cents per kWh, it should be pretty straightforward to just multiply the two numbers.

Well, like most things to do with electricity, it’s not quite as simple as that.

That’s because your Eversource bill is actually three bills in one – the customer charge, the supply charge and the delivery charge. You can only control one of these, and even that is not as easy as you might think. 

Let’s break them down one by one.

Customer Charge

Sure, it’s only ten bucks a month, but it’s frustrating to know that, even if you don’t use any electricity at all in a given month, you still have to pay just for the privilege of being an Eversource customer. 

If you think about it, Cape Cod homeowners have more to complain about than most when it comes to this charge since so many of the seasonal homes here do, in fact, use little-to-no electricity for several months of the year.

The customer charge covers everything from billing and customer service costs to maintaining the Eversource website.

The Supply Charge

When I stated earlier that the cost of electricity in Massachusetts is 21.11 cents per kWh, I was actually referring to the supply charge. This, quite simply, is the cost Eversource charges you for the electricity you consume.

It can be misleading since, in Massachusetts at least, the cost of the electricity itself often represents less than half of the monthly power bill. So with a rate of 21.11 cents per kWh for the power, most people in Massachusetts are paying closer to 40 cents per kWh by the time delivery costs and the customer charge are added in.

Another thing that’s confusing about the supply charge is that there are many different rates and that 21.11 c/kWh rate is actually an average of them all. Most people mistakenly believe that everyone gets their electricity from Eversource and that they’re paying the same price for their electricity as their neighbors across the street or their family members in a nearby town.

In Massachusetts, that’s not necessarily true.  

The reason is because Massachusetts is one of just 13 states across the country that allows for third party suppliers. So there are dozens of competing companies that are allowed to sell electricity in this market.

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The Role of Third Party Suppliers

Back in 1997, the Massachusetts Department of Public Utilities decided that adding more competition to the local energy market would be beneficial to customers, so they created a deregulated electricity market. 

In an effort to lower costs, new rules were implemented that allowed customers to pick their own electricity supplier. They could either choose to continue to having Eversource negotiate for the supply of their power, or they could pick one of dozens of other suppliers from across the country, leaving Eversource to handle just the delivery.

It’s a complicated system that has added a lot of confusion to the marketplace. While some of these third party suppliers have been good for customers, others have sought to take advantage of that confusion with some questionable marketing practices.

One particularly sneaky tactic has been to offer super low rates for an introductory period that then increase the rates dramatically after the initial promotion ends. 

To make it even more confusing, one aspect of the scheme was that homeowners who opted for a third party supplier got to pick: they could either receive a separate invoice from their chosen supplier or see those charges on their usual electricity bill, with Eversource taking care of forwarding the payment. 

The second option might seem like the easier one. After all, who wants to receive another bill? But it can lead to a “set it and forget it” mindset where a customer gets lured in by a cheaper rate, loses track of when the promotional period is scheduled to end, and gets stuck with hefty bills for months or years without even realizing how much their rates have increased.

And the fact that more and more electricity customers are now opting to pay their bills by direct debit and, therefore, never sit down to write a check any more only compounds this problem.

I came across one homeowner in Harwich a while back – a disabled veteran – whose now deceased wife had signed up for such a plan years earlier. By the time I reached out to him and took a look at his power bill, he had been paying 62 c/kWh for years without even knowing that this was more than 50% more than the prevailing Eversource rate at the time. 

As I said, some of third party suppliers offer competitive rates without the bait and switch tactics. But you have to choose carefully and be clear as to what you’re signing up for.

Delivery Charges

Lastly, let’s talk about Delivery Charges – an area where Massachusetts stands out from most other parts of the country. Here in the Baystate, delivery charges tend to be significantly higher than just about anywhere else in the country. 

In fact, for most homeowners in Massachusetts, almost half their energy bill is attributed to these delivery costs.

Why so? The state has pledged strong support towards renewable energy, which means they aren’t too keen on constructing new power stations anymore. Instead, shutting down existing ones seems to be a common trend here. 

A few years back we closed one power plant in Plymouth and another one in Somerset a couple of years before that. Another one in Charlestown is scheduled to go offline later in 2024.

This leads us to a situation where roughly 50% of our electricity comes from out of state. These delivery charges pay for this interstate transmission cost – maintaining power lines and substations, managing the vegetation around them, and covering various other expenses tied with ensuring electricity reaches our homes without hiccups.

Homeowners don’t have much control over these charges except that they are calculated on a per kWh basis.  So the only way you can reduce delivery charges is by using less electricity.

Renewable Energy Charges

Before we wrap up delivery charges, there’s an additional point worth noting. If you’ve ever scrutinized the section of your bill where these delivery charges are itemized, you might have noticed a few fees that don’t seem to have anything to do with delivery – like Renewable Energy Charge, Distributed Solar Charge, or Energy Efficiency Charge.

These costs collectively account for about 10% of an average consumer’s bill, and are collected by Eversource and then passed on to the state to finance two very popular green energy initiatives – Mass Save and Mass SMART.

Mass Save offers customers a chance to get their homes audited for potential energy conservation measures. They are then presented with a comprehensive report outlining ways to cut down on energy consumption, plus some free light bulbs, smart thermostat and maybe some rebates on insulation expenses.

On the other hand, the SMART program leans more towards renewable energy than conservation. It helps to fund incentives geared towards encouraging adoption of renewable energy programs, including residential rooftop solar.

Final Thoughts on Cape Cod Electric Rates

And there you have it, a comprehensive breakdown of your electricity bill. Understanding how your energy bill is calculated is crucial to devising strategies for reducing it. As the energy landscape shifts towards more sustainable solutions and Utility companies re-imagine their distribution methods, it’s inevitable that traditional energy costs will rise. 

And as energy costs rise and sustainable solutions evolve, Cape Cod homeowners will need to closely track how these industry shifts affect their household budgets.

On the other hand, the SMART program leans more towards renewable energy than conservation. It helps to fund incentives geared towards encouraging adoption of renewable energy programs, including residential rooftop solar.

The first job of a good solar consultant is to help you understand your electricity bill so you can determine if going solar is even going to save you money. If you’d like an informative, no-pressure chat with either of the Cape Cod Solar Guys, you can contact us here.

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