A happy consequence of the falling price of crude oil has been a steep drop in gasoline and heating oil prices.

But one form of energy, at least in Rhode Island, hasn’t yet followed suit. Utility company National Grid’s electricity rates remain at their all-time highs. The Public Utilities Commission approved a 21.7-percent rate increase in July, predicated in part on the steep rise in crude oil futures at the time.

Since then, crude oil prices have sunk 50 percent. Why haven’t electricity rates fallen as well?

“We continue to study the data related to collections and futures,” said David Graves, a company spokesman. “We will be filing for adjusted rates in mid-November for implementation on Jan. 1.”

The company’s most-recent projections, filed with state regulators last week, indicate that the company’s revenue from customers will fall short of the cost to buy electricity by about $4.5 million.

How could that be?

First, here’s how National Grid’s cost to buy electricity is related to the market price for oil. The utility company buys electricity from suppliers on behalf of the vast majority of its customers. It passes on those costs, dollar for dollar without markup, to its customers. The company does not profit from reselling the electricity.

National Grid buys the power through long-term contracts –– some of which date back 10 years –– with electricity generators. Many of those contracts require National Grid to pay extra for power if the market price of crude oil or natural gas — the fuels for the generators — rise above a certain trigger point.

So, rates go up when the price of crude oil or natural gas rises. But the converse should also be true — when market prices fall, electricity rates should fall as well.

In July, crude oil set a record high of $145.08 a barrel and natural gas reached $13.58 per million BTUs (short of the record high of $15.38 per million BTUs set in December 2005 after hurricanes Rita and Katrina).

But the high prices, combined with a slowing economy, have pushed down demand and prices have come tumbling down. Over the past four months, crude oil has fallen 52 percent and natural gas has dropped about 50 percent.

An analysis of National Grid filings by The Journal shows two primary reasons why these declines haven’t affected electricity rates yet.

First, when National Grid filed for its electricity rate hike in July, the company said that the increase, which pushed up a typical customer’s bill by $16.67 a month, was actually not high enough to meet the expected cost of buying electricity through the rest of this year. The company said it anticipated raising electricity rates again in January in order to bring its rates into balance with costs projected for next year.

So, even though customers were hit with a big rate hike, National Grid was not collecting enough money to pay for the electricity over the past few months.

The second major reason rates have not changed has to do with the timing of the drop in crude oil prices in relation to the time frame in which National Grid is required to file its monthly reconciliation reports.

The most recent report, filed last week, projected a $4.5-million under-collection through the end of December. But that projection was based on futures prices from Sept. 24, 25 and 26. At that time, crude oil was still trading well above $100 a barrel. Prices ranged from about $121 a barrel for oil to be delivered in October, down to $107 a barrel for oil to be delivered in December, according to the filing.

Over the past three weeks, crude oil has dropped more than 30 percent. Even yesterday, crude oil for December delivery declined $5.43, or 7.3 percent, to $66.73 a barrel on the New York Mercantile Exchange. Prices are down 24 percent from a year ago.

So the most recent decline in crude oil won’t be taken into account until next month, when National Grid files its next reconciliation report.

The Public Utilities Commission could ask the company to prepare an updated report, based on the most recent market prices of oil and natural gas.

Elia Germani, chairman of the PUC, said he has been reluctant to ask the company to come in again to adjust rates because there is an impending electricity rate increase that will automatically take place in January.

That increase is one of the annual rate hikes built into the contracts that National Grid signed with suppliers, at the direction of the General Assembly in the 1990s.

The intent of stepping up the price every year was to encourage people to switch electricity suppliers. But a market for residential electricity suppliers never materialized.

Germani said the scheduled increase in January is 0.4 cent per kilowatt-hour.

“I don’t want to encourage them to come in for a rate decrease now, only to have it go up again on Jan. 1,” he said.

“If the numbers show there’s going to be a decrease overall, that’s another thing,” he added.

He said he had an informal conversation yesterday with Ronald Gerwatowski, deputy general counsel for National Grid USA, about electricity rates.

“I just indicated I would like them to look at the numbers,” Germani said. “With the drop in prices, are we in for a rate decrease?” he said he asked.

“[Gerwatowski] said it depends upon what the numbers are looking like, what the numbers show.”

Has he considered asking the company to run those numbers now?

“I haven’t considered that,” Germani said. “At the present time, I am preoccupied with the rate case before us which is a major rate case.”

(The PUC is taking testimony this week in a significant proceeding that will ultimately affect natural gas rates for the next several years.)

“We’re all very sensitive to what the customers are suffering with out there,” he said.

“I can assure you I’ll be watching things.”

tbarmann@projo.com