Norwich ― The unprecedented natural gas costs that caused an average $15 per month increase in Norwich Public Utilities’ customer bills starting last month could bring significant savings a year from now, or at least help offset unpredictable new increases, NPU officials said.

When the city-owned utility expanded natural gas lines throughout the city several years ago, it also purchased extra capacity in the limited gas lines that serve the Northeast. That capacity, in high demand, has become a valuable asset worth millions of dollars per year, savings passed directly to NPU natural gas customers.

A new agreement with a firm that will sell NPU’s excess pipeline capacity to energy companies hungry to bring additional natural gas to fuel power plants in the Northeast will bring $7.5 million per year in revenue ― more than double the current $2.9 million the utility receives annually ― to NPU from Nov. 1, 2023 through Oct. 31, 2025.

The $7.5 million would translate to savings of about $40 per month, or 15%, in an average customer’s bill if applied today, NPU spokesman Chris Riley said. But the new agreement will not start until November 2023.

“This is based on the market today,” Riley said in an email explaining the new agreement. “There is no way to accurately forecast what the market will look like next November. There are too many variables that could come into play.”

If prices continue to rise, the new revenue could help keep Norwich natural gas bills somewhat in check next winter, NPU officials said.

Currently, NPU contracts with an asset management firm, Direct Energy Business Marketing LLC, which pays NPU $2.9 million per year to sell NPU’s excess capacity to energy companies.

With that contract expiring next November, and the natural gas market still in high demand, NPU went out to bid for a new asset management deal.

NPU awarded the new two-year agreement to Direct Energy Business Management, which will market and sell the pipeline capacity and pay NPU $7.5 million per year starting next November.

Steve Sinko, NPU division manager, explained the agreement and market conditions last week to the Norwich Board of Public Utilities Commissioners. Sinko said with demand so high for natural gas delivery to the Northeast region, DEBM might be able to sell the capacity for $15 million, but the company will take all the risks and marketing efforts, while NPU is guaranteed the $7.5 million.

NPU General Manager Chris LaRose said NPU has reserved 12,800 dekatherms of natural gas capacity per day in pipelines that transport gas to the region. On the coldest winter day, NPU natural gas customers use nearly all that capacity, LaRose said.

In summer, with natural gas used mainly for hot water in most homes and businesses, the usage drops to about 1,000 dekatherms per day. But during those hot summer days, natural gas power plants reach their peak demand to purchase natural gas to meet the demand for electricity to power air conditioners in residential and commercial buildings, LaRose said, making NPU’s excess capacity a valuable asset.

NPU electricity and natural gas customers started feeling the jolt of skyrocketing energy costs starting Nov. 1, with added monthly charges for purchased gas and purchased electricity on top of previously scheduled rate increases.

In November, Eversource, the largest for-profit electric utility in the state, filed a request with the state Public Utility Regulatory Authority to double its residential electric rate from 12 cents per kilowatt hour to 24 cents starting in January, increasing monthly residential bills by an average of $85, according to a Consumer Alert posted on the state Office of Consumer Counsel website.

c.bessette@theday.com