What is SELCO doing to mitigate rising energy costs?

Though many of the cost increases we are incurring are due to the macroeconomic factors described earlier on this page, SELCO proactively mitigates costs in a variety of ways. 

• Energy Costs: Set forth in our Power Supply Policy, SELCO has a detailed, structured hedging policy that largely insulates our ratepayers from the whims of the open market. In any given year, we purchase up to 85% of our electricity via direct contracts with suppliers, leaving only a small portion of our supply exposed to New England’s spot market, where prices can be astronomical during high-demand periods. Without this hedging practice in place, our energy costs would have risen much higher than they have throughout the past few years.
• Transmission and Other Peak Power Costs: To address the millions of dollars per year that SELCO and its ratepayers incur in transmission and capacity costs–the rates for which are set by ISO-NE and applicable to all of the region’s load-serving entities–SELCO is pursuing multiple utility-scale battery storage projects. A 5-MW battery storage facility could help avoid over $8 million in costs during its lifecycle. Our Connected Homes program also addresses these costs at the individual household level
• Smart Meter (AMI) Project: The main goals of our Smart Meter project include increasing operational efficiency, which will lead to cost savings for all of our ratepayers. When our metering infrastructure is fully upgraded later this year, staff will be able to read all meters and detect outages remotely and will have access to much more accurate data for analysis and planning. In addition, with access to their own detailed data, customers will be empowered to control their own bill costs. 
• Budgeting: Cost transparency is a tenet of our business model as a public power utility. SELCO carries out its annual budgeting, financial reporting, and rate-making in public sessions under the purview of the SELCO Commission, a group of Shrewsbury residents.

Why are SELCO’s rates lower than Investor-owned utilities (IOUs)?

Public Powered Municipal Light Plants (MLPs) like SELCO typically have lower rates than Investor-Owned Utilities (IOUs) like National Grid or Eversource due to several key factors:

• Not-for-Profit Structure – MLPs are community-owned and operate on a not-for-profit basis, meaning they set rates based solely on the cost of providing service rather than generating profits for shareholders. MLPs reinvest all revenue back into system improvements, programs, and services. 
• Local Control & Efficiency – SELCO is governed by a local commission, the SELCO Commission, comprising five Shrewsbury residents. This allows for more efficient decision-making and cost controls tailored to the needs of the community.
• Direct Power Purchasing – Many MLPs, including SELCO, have more flexibility in power procurement strategies, often securing cost-effective power supply agreements without the added markup or regulatory requirements that IOUs face.
• Lower Transmission Costs – SELCO benefits from local generation and strategic power agreements that reduce dependence on regional transmission systems, helping keep costs lower.

These factors allow SELCO to offer some of the most competitive electric rates in the region while maintaining reliable service and investing in community-focused programs.

SELCO increased rates in September 2024. Why is there another increase?

The Cost of Service Study (COSS) completed in August 2024, recommended a multi-phase rate adjustment to avoid a large, one-time increase. This phased approach helps spread out costs gradually rather than overburdening customers with a large increase, especially before the winter months. Additionally, a review of this year’s budget and rising transmission and energy costs showed that an additional increase is necessary to prevent shortfalls and ensure each rate class pays the charges necessary to ensure its fair cost of service.