In an order designed to alleviate costs for customers, the Massachusetts Department of Public Utilities (DPU) announced on Tuesday they’re approving changes to the schedule used by energy providers to separate the most expensive winter months into two periods.
The schedule is used by Eversource and National Grid to purchase and set rates for basic service electricity supply. State officials say this schedule change will reduce large seasonal changes in basic service electricity supply prices and differences across electric distribution companies.
Electricity supply is procured in a competitive market under Massachusetts law. As such, customers don’t choose their own supplier, but electric companies are required to contract for a supplier on the customer’s behalf, and basic service is procured through a bidding process.
“Due to our current reliance on fossil fuel generation, customers can experience significant volatility in electric supply prices,” said DPU Chair James Van Nostrand. “Today’s decision is an important step towards minimizing significant price swings for basic service customers, while we transition to clean energy sources that will not only help stabilize energy rates but also lower emissions and improve air quality.”
The new order requires Eversource and National Grid to change their current basic service periods for residential and small business customers to six-month periods of February through July and August through January, according to the DPU. Large business customers are required to follow three-month fixed-rate periods of February through April, May through July, August through October, and November through January.
In January 2023, the DPU opened an investigation into the pricing of basic electricity supply due to the significant increases in supply rates Massachusetts customers faced in 2022.
Officials credited a number of factors for the high costs, including the conflict in Ukraine, regional natural gas transportation constraints for electric generation, and the uncertainty of basic service customer load.
Part of the investigation showed January and February, the coldest winter months, were included in the same procurement period, which proved to be costly for many customers.
In a statement, Eversource said they’re “supportive” of the change, saying in part:
The unprecedented volatility in the global energy supply markets has had a significant impact on our customers, and we’ve been working with the DPU through this docket to evaluate the procurement process and schedule. The department’s order in this docket is consistent with our proposals, and the new schedule for supply rate changes on February 1 and August 1 is consistent with the schedule for Eversource customers in New Hampshire. As we transition to this new schedule, we continue to focus on supporting customers who may be struggling with their energy bills with our various payment plans, assistance programs and energy efficiency solutions.
Similarly, National Grid is also pleased with the DPU’s quick action, saying:
National Grid appreciated the Department opening an investigation into basic service procurement and has been supportive of re-evaluating aspects of the process, given electricity supply dynamics in our region. We are pleased that the Department acted expeditiously ahead of this coming winter season and believe that the approved changes to the procurement schedule will help reduce price volatility for customers, while maintaining a secure and reliable supply of electricity for basic service. We look forward to continuing to engage with the Department and work with the state’s other utilities as the review continues.
To read the DPU’s full order, click here.
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