National Grid separates your bill into two services: supply and delivery. Supply Services is the portion of your electric service for which you can shop for your electricity supply from a supplier other than National Grid. These suppliers, often referred to as competitive suppliers, can be companies that produce or generate electricity or are brokers that buy electricity in the wholesale market and sell it to residents and businesses. National Grid is a delivery company, which means we will deliver electricity to you regardless of your choice of supplier. We encourage you to shop and compare the prices of competitive suppliers. Find out more about choosing your supply of electricity from a competitive supplier by visiting our Energy Choice area.
If you choose a competitive supplier, National Grid will continue to deliver electricity to your home or business, read your meter, care for the poles and wires, provide customer service, and restore power when there is a service interruption.
If you have not chosen a competitive supplier, we will purchase electricity and deliver it to you through Standard Offer Service. The Supply Services section of your bill identifies you as a Standard Offer Service customer by listing National Grid as your supplier. Standard Offer Service ensures that no one will be without a supply of electricity.
To make sure we can provide you electricity through Standard Offer Service, we buy electricity periodically throughout the year. We conduct a competitive solicitation, requesting bids from wholesale electricity suppliers who want to supply us electricity that we can deliver to you. As a result, we enter into contracts to purchase electricity from one or more of these wholesale suppliers. We do not profit from any of these arrangements or from the prices we pay wholesale electricity suppliers under these contracts.
National Grid purchases its Standard Offer Service supply and sets Standard Offer Service rates for three groups of customers. Which group you are in will depend upon the rates for which you are billed delivery service by us, which are shown in the Delivery Services section of your bill. The three customer groups and the delivery services included in each are as follows:
As a Standard Offer Service customer, the pricing options available to you will depend on your customer group. As a Residential customer, you have one pricing option-the Fixed Price. As a Commercial customer, you have two pricing options available to you-a Fixed Price Option and a monthly Variable Price Option. As an Industrial customer, you have one pricing option-the Variable Price.
As the term implies, the Fixed Price does not change over several months (6 months), and provides the convenience of having a more stable electric bill that would only vary as a result of the amount of electricity you use from month to month.
The Variable Price Option offers a price that changes each month. This rate option offers you the opportunity to save money by shifting your electricity usage from the months with higher prices to those with lower prices.
National Grid sets the rates for each option based on the prices in its contracts with its Standard Offer Service suppliers.
The Standard Offer Service rate billed to you under the Fixed Price Option will remain the same for a pricing period (currently 12 months for residential customers and 6 months for commercial customers). Under the Fixed Price Option, the Standard Offer Service rate changes every January 1 and July 11. For 2015, the Fixed Price Option and Standard Offer Service rate for residential customers covers a 12 month pricing period beginning January 1. All rates are based on the average monthly contract prices in our Standard Offer Service supply contracts over the pricing period.
All Residential Group customers and all Rate C-06 (Small C&I) Commercial Group customers are automatically placed on the Fixed Price Option when first applying for Standard Offer Service. As a Rate C-06 Commercial customer, you have the option to switch to the Variable Price Option once during a twelve month period. However, once your election has been made, you must remain on the Variable Price Option for a period of at least twelve (12) months.
1You may notice that your Standard Offer Service rate changes on April 1, but that is because the additional charges that are added to the Standard Offer Service rates, as described below in Other Costs Included in Standard Offer Service Rates, change every April 1.
The monthly rates under the Variable Price Option will change from month to month to reflect the monthly prices of electricity we purchase each month under our contracts with our Standard Offer Service suppliers.
All Industrial Group customers and all Commercial Group customers served under rates G-02, S-06, S-10 or S-14 are automatically placed on the Variable Price Option when first applying for Standard Offer Service. As a Commercial customer, you have the option to switch to the Fixed Price Option once during a twelve month period. However, once your election has been made, you must remain on the Fixed Price for a period of at least twelve (12) months.
For current and past Standard Offer Service rates, please visit:
In order to provide Standard Offer Service rates that can be compared to prices of competitive suppliers so our customers can make better decisions on whether to buy their electricity from a company other than National Grid, National Grid is allowed to include in the Standard Offer Service rates that appear on your bill an additional charge to reflect certain administrative costs that are paid by National Grid. National Grid is subject to these administrative costs solely because it is required, by state law, to provide Standard Offer Service to our customers. Competitive suppliers have similar costs as part of their business of selling electricity to residents and businesses in Rhode Island.
Administrative costs that are reflected in the Standard Offer Service rates you see on your bill include the cost of "working capital", that is, money the Company needs throughout the year to pay its expenses on time. These administrative costs also include Standard Offer Service charges that the Company was unable to collect from other Standard Offer Service customers. Also included are the cost of employees who conduct the competitive solicitations and enter into contracts for Standard Offer Service, calculate the Standard Offer Service rates and submit them to our regulator for approval, create and distribute all of the required information to our customers, and bill customers for Standard Offer Service.
National Grid is subject to rules developed as a result of a state law for promoting the development of clean, renewable energy. The rules govern the state's Renewable Energy Standard (RES) and require companies like National Grid who provide electricity to residents and businesses to either buy electricity generated from renewable electric generation resources or purchase Renewable Energy Certificates (RECs), which are used to fund the development of renewable electric generation resources. National Grid complies with these rules by purchasing RECs and, if you are a Standard Offer Service customer, the cost is reflected as a separate line item on your bill as the Renewable Energy Charge.
Note, when shopping for your electric supply, you must compare the Standard Offer Service price(s) applicable to your customer group plus the Renewable Energy Charge to prices offered by competitive suppliers. Competitive suppliers will also pass on the cost of complying with the state's RES requirements; however, this cost will most likely be embedded in the price quoted to you.
National Grid calculates Standard Offer Service rates using monthly prices in our contracts with wholesale suppliers for each 6 month period under the Fixed Price Option. We must also estimate the quantity of electricity we believe our customers receiving Standard Offer Service will need each month. This calculation is not exact and often, over the course of the Fixed Price Option period, the amount we bill our Standard Offer Service customers is different from what we ultimately pay for Standard Offer Service under our contracts. National Grid also determines the difference between the cost of purchasing RECs to comply with the state's RES, which was described above, and the amount billed to Standard Offer Service customers for purchasing the RECs. The difference between the amount billed and the actual cost of Standard Offer Service supplied and RES compliance is measured over a year, and will show that we have either billed too much or too little as compared to our actual cost.
National Grid does the same evaluation for the administrative costs, which are also described above. We estimate what these costs are likely to be and calculate the charges that are added to the Standard Offer Service rates calculated from the prices in our contracts with wholesale suppliers. Each year, we compare the amount billed through the administrative charges and actual administrative costs to determine if we have billed too much or too little as compared to our actual costs.
National Grid does not make money or profit from Standard Offer Service. As a result, our regulator allows us to recoup any amount we have under-billed and requires us to refund any amount we have over-billed. This takes place over a 12-month period after our regulator has reviewed our comparison of Standard Offer Service billings to the costs of supplying Standard Offer Service, complying with the RES, and our administrative costs.
As explained above, your bill is separated into two services: supply and delivery. While you cannot control how the electricity is delivered to your home, you can reduce your cost by reducing your consumption of electricity and/or purchasing your electric supply from the seller of your choice. For tips on reducing your energy consumption, please visit Energy Efficiency. For more information about choosing a competitive supplier, please visit our Energy Choice area.