Regulator Denies Utility's Petition To Remove Mystic Costs From Default Service Bids

Utility Had Sought To Pass-Through Costs, With Estimates Used In Rate Setting (With Reconciliation Nonbypassable)

December 12, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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The Massachusetts DPU denied a petition from National Grid which had sought to exclude the responsibility for costs resulting from the ISO New England Mystic Cost of Service Agreement from electricity basic service (default service) bids, with bidders instead passing through to National Grid their actual costs related to the Mystic agreement

National Grid had proposed to include an estimate of costs related to the Mystic agreement for basic service load in the ultimate basic service prices charged to retail customers

However, under the utility's proposal, to the extent actual Mystic costs differed from the estimate that National Grid included in retail basic service rates, any reconciled deviations would have been included in the annual Basic Service reconciliation and, ultimately, recovered through the nonbypassable Basic Service Adjustment Factor (BSAF).

See more background here

The DPU denied the petition, stating that not enough information has been provided to justify the proposal.

Citing recent wholesale procurements that went partially unfilled due to elevated pricing, the DPU noted that, "the Mystic COS Agreement costs (in effect June 2022) were not raised by any company, including National Grid, as a reason for wholesale suppliers’ recent reluctance to bid or for why the bids that were received were unreasonably high and ultimately rejected."

"The Company asks the Department to remove a component of the costs on which basic service rates are based (Prefiled Testimony at 2). Further, the Company request seeks to remove a cost component that is not unique to basic service suppliers. All competitive suppliers must take the Mystic COS Agreement into account. By approving the Company’s request, we would be substantially altering National Grid’s basic service offering from that of NSTAR Electric Company, d/b/a Eversource Energy and Fitchburg Gas and Electric Light Company, d/b/a Unitil, both of which include Mystic COS Agreement costs. The Department would also be altering basic service pricing based on anticipated unsuccessful solicitations, rather than developing an alternative procurement method as a last resort," the DPU said

"This we decline to do based on the record before the Department without input from stakeholders and a record to support our decision. G.L. c. 30A, §§ 1, 10, 11, 14; 220 CMR 1.10. The Department finds that it has insufficient facts on which to approve National Grid’s request to remove the Mystic COS Agreement costs from its basic service solicitations. Consistent with the Attorney General’s comments, the Department would require a more robust record, examining the various basic service cost components, the magnitude of the Mystic COS Agreement costs,4 the method for estimating the Mystic COS Agreement costs to include in rates, the Company’s proposal to reconcile the estimated costs with actual costs, and which customers should be responsible for such costs on which to base a decision of the costs that should and should not be included in basic service prices (Attorney General Comments at 2-3). Accordingly, based on the record before us, the Company’s petition is denied," the DPU said

Notably, the DPU said that, "Considering our decision ... it would be premature to address the substantive issues raised by the commenters regarding the effect of including basic service costs in base distribution rates paid by all customers (e.g., subsidization, price signals, retail market competition)."

Docket 22-BSF-D4

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