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Massachusetts Won't Defer or Cap National Grid Default Service Rate Increase (16¢ Rate Allowed to Take Effect)

November 7, 2014

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

The Massachusetts DPU will not defer or cap National Grid's new basic service rates which took effect November 1, which include a doubling of the residential rate to 16 cents per kWh.

"The Department agrees with the majority of the commenters that changing National Grid's basic service rates by deferring costs from the current basic service term to another term, or by calculating a weighted average basic service rate over a twelve-month period, would not be in the ratepayers' best interests, would disrupt the competitive market, might result in higher basic service bid prices in the future, could shift costs to non-basic service customers, and would be contrary to Department precedent," the DPU said.

"As almost all commenters discussed, the Basic Service Proposals would not reduce the cost of basic service for customers, but instead would spread the cost recovery over a longer period of time, which would increase carrying charges and distort price signals. If the Department adopted either Basic Service Proposal, customers would pay below market prices in the winter months and above market prices in the summer months. Overall, basic service price signals and seasonal price variability would be disguised and potentially increase customer migration risk for basic service suppliers," the DPU said.

"While we recognize that higher basic service rates in winter may pose a financial challenge for many customers, the Department finds that its current approach to basic service ratemaking strikes an appropriate balance between two objectives – price stability and efficient price signals (i.e., aligning basic service rates with prevailing market prices)," the DPU said.

The DPU deferred to a future date a decision on whether to open an investigation into revisiting the Department's established rules regarding the procurement and pricing of basic service

To address ratepayer impacts from the higher rates, the Department directed National Grid, and the other electric distribution companies, to continue their ramped up efforts to educate customers about the increasing basic service rates and to promote programs that will assist customers in managing their energy use and electricity costs, "including educating customers about competitive electricity supply options."

The DPU directed the electric distribution companies to more actively promote and allow customers to enroll in budget billing programs on a rolling twelve-month basis. "At this time, we do not require electric distribution companies to offer budget billing programs to any customer class other than residential customers. However, while we recognize that there may be implementation limitations, the Department encourages the electric distribution companies to explore the possibility of allowing low-income customers who participate in an arrearage management program and small C&I customers to participate in budget billing or similar program. The Department also directs the electric distribution companies to include a discussion of the possibility of enrolling customers participating in arrearage management programs into budget billing programs in the companies' next arrearage management program filings," the DPU said.

The DPU also directed the electric distribution companies to continue to collaborate with the Executive Office of Energy and Environmental Affairs, DOER, the Massachusetts Clean Energy Center, LEAN, and the Massachusetts Energy Efficiency Advisory Council on a number of energy efficiency initiatives and to encourage customers, especially electric space heating and low-income customers, to participate in energy efficiency programs

D.P.U. 14-BSF-D3-A

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