For many Massachusetts residents, steep electric bills may have reflected more than expensive power alone. For about a decade, households appear to have been charged well above the underlying cost of electricity.
According to a new analysis, the largest gap showed up on basic service, suggesting the default supply option may be one reason monthly bills have felt so punishing for many families.
What's happening?
Reviewing the years from 2015 through 2024, Cambridge-based energy think tank Synapse Energy Economics found that New England electricity customers were billed billions beyond underlying supply costs.
For Massachusetts customers who stayed on basic service, Synapse estimated an average premium of 43% above the benchmark cost, or about $22 per month, as reported by The Boston Globe.
The same pattern appeared outside default utility service as well. The analysis found that customers in municipal aggregation programs, including residents in systems such as Boston's, still paid an average premium of 24%.
Because basic service is the default option for many households that do not choose a separate electricity supplier, a large number of residents may have paid inflated prices simply by remaining on the standard utility-linked plan.
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To reach its conclusions, the report measured wholesale electricity costs against the prices consumers were actually charged and found that the gap persisted over years, not just during a short-lived spike.
Why does it matter?
That is money that could have gone toward rent, groceries, child care, transportation, or other necessities.
The findings also put greater scrutiny on the business decisions and market structures that shape utility bills. When retail electricity prices remain far above wholesale costs, consumers are left carrying the burden.
High electricity bills can also discourage households from switching to cleaner technologies such as heat pumps, induction stoves, and electric vehicles.
If people view electric power as too expensive or unpredictable, they may stick with gas- or coal-powered systems for longer. High electricity bills can also slow the shift to cleaner, more efficient homes and transportation.
What's being done?
Households can blunt some of the impact by reducing electricity use through weatherization, efficient appliances, LED lighting, and smart thermostats. For homeowners and renters who have access, community solar or rooftop solar may also offer a way to lower costs.
"In recent years, this retail premium cost many electricity consumers even more than the price of the energy itself," the report said. "Consumers deserve a system that better reflects the real cost of procuring electricity."
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