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Regulator Rules On Proposal To Change Default Service Procurement Rate Classification

January 8, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Massachusetts DPU has issued an order on the rate consolidation track of NSTAR and Western Massachusetts Electric Company's (Eversource) rate case, which addressed proposed impacts on basic service from such proposed rate consolidation

Notably, Eversource had proposed that, effective January 1, 2019, the companies would reassign NSTAR Electric and WMECo C&I customers to new rate classifications. While, for distribution rates, the companies proposed separate rates between NSTAR’s and WMECo’s C&I rate classes, the EDCs had stated that the proposed consolidation of rate classes necessitates a re-classification of the rate classes that are classified as commercial versus industrial for the purposes of basic service procurement and pricing

According to the EDCs, the proposed consolidation of rate classes will place all Rate G-1/Rate G-5 customers under the commercial six-month procurement, while the larger Rate G-2 through Rate G-4 classes will be subject to the quarterly industrial procurement

In its order, the DPU declined to approve Eversource’s proposal to align and consolidate C&I rate classes at this time, citing a disparity in the embedded costs among the current C&I rate classes which makes consolidation inappropriate

"Because the Department declined to approve Eversource’s proposal to align and consolidate C&I rate classes at this time, the current basic service procurement process will remain unchanged," the DPU said

"If the Companies seek to consolidate C&I rate classes in a future proceeding, they shall address any changes to distribution companies’ costs, their billing systems, impacts to their customers, impacts to the suppliers, and the wholesale market in general," the DPU said

The DPU approved Eversource's proposal to consolidate its residential distribution rates across all four legacy companies (Boston Edison Company, Cambridge Electric Light Company, Commonwealth Electric Company, and WMECo), as the DPU said that the differences in unit embedded costs among Boston Edison Company’s, Cambridge Electric Light Company’s, Commonwealth Electric Company’s, and WMECo’s residential customer classes are within an acceptable range

However, while not using the term "residential" specifically, the DPU said that Eversource’s proposal, "will not require all customers across the Commonwealth to pay the same rate for basic service."

The DPU noted that, "The Companies propose to maintain separate pricing between their NSTAR Electric and WMECo service territories and set basic service rates on the basis of separate ISO-NE zonal procurements."

Eversource had specifically said in its initial filing that it would continue to procure basic service based on the ISO-NE load zones in Eastern Massachusetts (EMA) and Western Massachusetts (WMA).

Eversource had also said in an information request response cited by the DPU in its order that, "As indicated in the Company’s initial filing, Basic Service would continue to be procured on the basis of the ISO-NE load zones in EMA and WMA. The Company intends to continue to procure Basic Service on the basis of separate load zones so as to inform separate pricing for WMA and EMA."

Although Eversource's statements specifically used the term "procurement" to describe the zonal difference (as opposed to pricing), based on the DPU's language above, it would appear that the DPU intends for residential Eversource basic service rates to differ based on whether the customer is in the west (WMECo) or east (NSTAR). However, it would appear that, as is currently the case, residential basic service rates at NSTAR (east) would not vary by ISO-NE zone; although the NSTAR load is procured separately by zone (e.g. NEMA versus SEMA) the NSTAR residential rates are blended into a single, NSTAR-wide rate.

Docket D.P.U. 17-05-B

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