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WPCNR THE POWER STORY . By John F. Bailey. Interview with Dan Welsh of Sustainable Westchester February 19, 2025:The announced recent rate hikes of 11.4% for electricity and Natural Gas (13.3%) applied for by Con Edison to the Public Service Commission of New York should they be approved despite objections by Governor Kathy Hochul and State Senator Shelley Mayer of the 37th State Senate District have created questions on the need for such a high rate.Consumers were stunned when State Senator Mayer announced last week her shock over the rate hikes that are double the rate of inflation in 2023 (currently 3.5% inflation as of last week).The inflation rate in 2023 was approximately 8%. The new rates requested by Con Ed are more than 8%.
In another development last week a decision by the Federal Energy Commission approved a request by PJM INTERCONNECTION (the nation’s largest power grid covering the midwest) to allow that power company to build 50 new power plants powered by natural gas. ( That was reported last Thursday by The New York Times.)
What was not clear in the article was how this would affect the price of natural gas. Natural gas is the most expensive source of power to use to make electricity.
Three years ago when the New York Independent Services Operator decreed that all power companies drawing down from the Northeast power grid in New York would pay the highest priced rate which happened at the time to be natural gas.
In the last three months the Sustainable Westchester/Westchester Power consortium, which White Plains is a member along with 29 other cities and towns in Westchester County, has had a green energy sourced rate of 13.4 cents per kilowatt hour compared to 15.6 per kilowatt hour last year.
The clearance for 50 plants from the FEC allows PJM INTERCONNECTION to create more natural gas which PJM argues is a more reliable than solar power, wind, or water power to meet surging power demands created ny crypto currency, artificial intelligence creation and industry darlings of the moment.
WPCNR wondered how this line of reasoning (solar, wind and water power being “unreliable” sources of power), and with expansion of natural gas capacity possibly making natural gas even more expensive what the effect would be.
When New York Independent Services Operator decided three years ago to designate natural gas the source the price of which would be the rate for electricity for Sustainable Westchester/Westchester Power who opted for green rate electriticy generated, (from 7.5 cents per kilowatt hour to 15.6 cents for kilowatt hour)
I contacted Dan Welsh, Program Director of Sustainable Westchester, in Mount Kisco and asked him questions about power prices ahead and how conditions might affect Sustainable Westchester rates in the future
WPCNR: Has the new clean energy electric rates for 2025-26 been set yet? (I do not think they have)
DAN WELSH: Current rates are fixed through the end of November 2025. We’re about to start the dialogue with municipal participants for the next contract.
WPCNR:. Am I correct in assuming if the Trump Administration allows Natural gas to get first access to internet will this prevent new solar installations wind installations getting onto the grid?
DAN WELSH: Not 100% sure what you mean by “access to the internet”, but of course we hear the same news that you do – that natural gas and fossil fuels in general will be promoted by the Administration.
As far as what’s getting in the way of new renewables construction, low gas prices could threaten the returns and put (renewable sources) developers off, as can regulatory uncertainty.
There are so many things happening at once in the market, I can’t and should not be predicting where we’ll end up.
Factors associated with the price-determining natural gas markets that we know though –
- Expected increase in exports – that would drive prices up if realized. Will the tariffs/trade disputes change things here?
- Current (gas) storage levels are lower than they were in previous years which would push prices up too.
- If there is an increase in production in response it would pull prices back down. Of course you can’t just order that, and even if you give away National Park land for drilling, producers will expand production only if the business case calls for it.
- Right now, the unexpected winter chill, and also the uncertainties around policy and international events are sustaining futures prices, though not much over what we understand to be production break-even – we’re not seeing anything like the Ukraine war run-up.
WPCNR: 3. Natural gas was made the rate standard for setting price of electricity off the grid which had the effect of doubling the Westchester Power clean energy rate up to 15-1/2 cents. Since natural gas is going up in price does this mean your (new) negotiated green rate (next year) is going to go up like 5 cents way over the present rate right?
DAN WELCH: Natural gas sets prices in the market today because in the NYISO auctions the quantities available are such that it inevitably provides the last megawatt-hour of power required to fill the needs, and that’s what sets the price for all of the auction.
As noted, we’re locked in through November 30,2025. We hope that when we are ready to go to bid that things are relatively calm and we won’t see those high rates.