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It Begins: Attorney General Seeks Mitigation of Spiking Default Service Rates; Wants Less Exposure to Market

October 3, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The Office of the Massachusetts Attorney General has urged the DPU to open an investigation, "into ways to mitigate the dramatic rate increases that will impact National Grid's Basic Service customers on November 1, 2014, as well as anticipated increases to other electric distribution companies' basic service rates."

The National Grid residential supply rate will exceed 16¢/kWh, with some monthly large C&I rates exceeding 20¢/kWh.

While the AG acknowledged the, "limited statutory authority to review increases in basic service supply costs under chapter 164," the AG also suggested that, "[t]he full magnitude of the increases in Basic Service rates may violate the Department's rate continuity precedent. See GAF Orders, D.T.E. 01-9 through 01-18 at 5 (2001)."

"In the GAF Orders, the Department defined rate continuity to mean 'that rate structure changes should be made in a predictable and gradual manner which allows consumers reasonable time to adjust their consumption patterns in response to a change in structure,'" the AG said.

"As such, the Attorney General's Office respectfully requests that the Department work with National Grid and other stakeholders to determine what part, if any, of the cost recovery of the Winter 2014/2015 residential Basic Service rates may be deferred to the next 6-month period, May 1, 2015 through October 31, 2015 to smooth out the rate impacts between those periods. The Department should explore allowing more flexibility in the timing of recovery for Basic Service supply costs for other rate classes as well," the AG said.

"We also ask that the Department open a separate generic investigation into the sufficiency of competition in the electricity supply market and the distribution companies' reliance on, and exposure to, that market. In particular, we urge the Department to review basic service procurement practices, including the timing of the solicitation, as well as the methods used to solicit. The investigation should also review the effect of ISO New England's winter reliability plans and the effect of current gas transportation constraints on wholesale energy prices this winter and in future winters," the AG said.

"Finally, the Department should explore initiatives which could provide customers with greater notice of these changes. In this regard, we acknowledge and appreciate the letters the Department sent to the distribution companies, dated October 2, which ask the companies to submit materials to the Department by October 10 describing how the companies may improve their notifications of customers of impending rate changes," the AG said.

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