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Why bills are rising – and what you can do about it

The market prices we all pay for electricity and natural gas are rising, and residents and business in the Mid-Hudson Valley have certainly seen the effects of these increases in their energy bills. While Central Hudson strives to keep its costs as low as possible, energy prices are still subject to national and international market forces. (To learn why energy prices are rising nationally,
click here)

First, it’s critically important to realize that since deregulation there are two portions to electric and natural gas bills:

Delivery rates are regulated and set by the New York State Public Service Commission; Central Hudson receives only the delivery portion of bills and uses that income to maintain and operate the electric and natural gas delivery system, including providing services such as reading meters, restoring service after storms, installing new equipment and answering telephones. Delivery rates have been relatively stable for more than a decade, and are adjusted through a formal ratemaking process. Delivery charges represent 30 to 40 percent of your total Central Hudson bill.

Supply charges reflect that amount of electricity and natural gas you use, and their commodity prices vary with market conditions. The supply portion represents 60 to 70 percent of the typical bill. Central Hudson passes the cost of purchasing energy supply through a competitive market on to customers without any type of mark up in price; in fact, we actually provide some measure of supply price stability for our customers through hedging and buying practices (for example, while spot market prices for electricity and natural gas rose by 30 and 60 percent, respectively, since last fall, the supply prices paid by Central Hudson customers rose on average by 6 and 8 percent over the same period).

Under deregulation, New York utilities like Central Hudson are not permitted to own generating facilities, and must now purchase electricity on the energy market on behalf customers. Learn more about deregulation and customer choice here.

Why are energy bills rising?
There are many factors, including increasing demand for energy both nationally and abroad. Total bills are higher because customers are simply using more energy to power the proliferation of electronic devices in their homes and businesses. In fact, energy use per household in the United States has risen by more than 25 percent from 1985 to 2005; and in the Hudson Valley by nearly 33 percent.

(click on graphic for larger version)

In addition, the cost of fuels used to generate electricity, oil, coal and natural gas, has increased sharply in recent years. Natural gas, for example, is in higher demand to generate electricity, rising in use from 13 to 22 percent of all generating plants from 1990 to today. This higher demand for energy, both here and abroad, increases the market price paid by all of us.

Source: U.S. Department of Energy
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Although energy prices are rising, when compared to other commodities and services, electricity has risen only modestly, and remains one of the best values over time. The graph below shows how electricity prices increased less than the Consumer Price Index and other commonly purchased items from 1985 to 2005:

Source: Edison Electric Institute
(click on graphic for larger version)

What about renewable sources of energy?
Renewable sources of energy are a growing part of the energy mix, and will become increasingly important in the years to come. Although the amount of energy generated by renewable sources is presently small, investment in renewable technologies is increasing (in fact, Central Hudson’s holding company, CH Energy Group, has investments in wind and biomass generating facilities – learn more about how you can support renewable energy here). The cost of energy from renewable sources is generally comparable to that of conventional sources. Nuclear energy, which has zero air emissions, is comparable other sources.

Source: U.S. Department of Energy
(click on graphic for larger version)

What is Central Hudson doing to help?
On the delivery side, Central Hudson has worked hard to keep operating expenses low while improving service reliability and customer service. Operating expenses, as a percent of revenues are also below the state average, and Central Hudson serves more customers with fewer employees today than in 2002.

 On the supply side, Central Hudson provides a measure of price stability in the way electricity and natural gas is purchased. Although Central Hudson does not control the price of electricity or natural gas, the utility uses a variety of purchasing methods, such as energy contracts, hedging and real-time purchases, to dampen market swings in energy costs. The chart following shows how Central Hudson's purchasing methods (hedging) have historically produced supply prices for our customers that are below market:

(click on graphic for larger version)

Central Hudson is also seeking permission to offer an Energy Efficiency program, which would provide resources and incentives to help our residential, commercial and low-income customers use energy more efficiently, save money and protect the environment. This proposal is currently pending approval from New York State (click here to learn more about this important initiative).

 Central Hudson customers have paid amongst the lowest electric bills in New York since 1993, and natural gas bills that are near the statewide average. There are steps customers can take, too, in order to use energy more efficiently, protect the environment and lower bills.

What can I do?
Take steps to use energy efficiently

Everyone can take steps to better manage their energy use by using energy more efficiently. Insulating attics, sealing leaks and drafts, lowering the water heater thermostat, washing clothes in cold water, purchasing Energy Star rated appliances and replacing incandescent light bulbs with compact fluorescent lamps are all ways in which we can reduce the amount of energy we use, live more comfortably, lower our energy bills and help to protect the environment. Learn more by visiting Central Hudson’s Energy Efficiency page here; and help your children learn about wise energy use through our Kids Corner.

Enroll in Budget Billing

Budget Billing spreads your annual electric and natural gas bills evenly each month, avoiding seasonal fluctuations in energy costs and providing households with predictable energy bills. Payments will be uniform over 11 months based on your actual usage history, and the bill for the 12th month will include an annual plus-or-minus adjustment to reflect the actual usage and price for the year. To enroll, contact our Call Center at (845) 452-2700 or, for calls from outside the 845 area code only, 1-800-527-2714.

Shop for electricity and natural gas supply

Residents and businesses may shop for electricity and natural gas supply from competing marketers as a result of deregulation. Central Hudson will remain your energy delivery company, and we'll help you obtain information to make an informed choice on your energy supply. For more information, visit Energy Choice.

Time of Use billing

Time-of-Use is an optional billing method for residential customers to purchase their electricity based on when the actual use of electricity occurs. Time-of-Use pricing charges customers lower prices for electricity used during periods of low overall electric demand (off-peak hours) and higher prices during periods of higher electric demand (on-peak hours). By shifting the consumption of electricity to periods of lower demand, customers can take advantage of lower-cost energy. For more information on Time-of-Use Billing, click here.

Qualified residents may apply for assistance

There are several programs to help customers with their utility bills, including the Home Energy Assistance Program that provides grants for income-qualified households, and the Powerful Opportunity Program, which combines energy conservation and financial management measures with assistance toward past due balances. Also available is the Good Neighbor Fund, Hospitalization Program, Deferred Payment Arrangements and other special programs. For more information on these assistance programs, click here.

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