Choice Utility, In SOS TOU Investigation, Says Retail Suppliers "Best Suited" To Address TOU Responses From Customers, Says Utility Supply Meant To Be "Straight-Forward Default Supply Option"

In the Massachusetts DPU's investigation of time-varying rates (TVR) for basic electricity service (default service), NSTAR (Eversource) said that retail suppliers are best suited to manage various impacts from customer responses to time of use rates, and emphasized that basic service is meant to be a "default" option

NSTAR reported that only 10-15 percent of electric distribution load currently takes Basic Service for supply, with most load on either opt-out municipal aggregation or competitive retail supply

Addressing a DPU question about the optimal peak period for TOU rates, NSTAR said that, "The consumption dynamics for the average customer across all Massachusetts may not align with the individual rate class consumption dynamics of those customers who remain on Basic Service. Those remaining customers may also not respond well to price signals associated with TVR."

NSTAR said that, "Retail suppliers have indicated that they will target TVR rates to customers who are best equipped to respond to price signals. Retail suppliers are also best suited to evaluate and manage supply costs that will fluctuate due to TVR price responses from customers."

"Basic Service is designed to be the default supply option. Given that the state has robust community aggregation and retail supply participation and offerings, trying to create a Basic Service TVR product that is opt-out may create large Basic Service over or under recoveries, not achieve state goals, and erode the concept of a straight-forward default supply option," NSTAR said

Addressing more specifically establishing a peak period under TOU, NSTAR said, "The Company analyzed peak loads and wholesale locational marginal prices ('LMPs') aggregated across the Company’s Massachusetts service territories during 2021-2025, and the analysis does not conclusively support a single, year-round peak period."

"Peak loads typically occur between 5:00 p.m.-9:00 p.m. during the first half of the year and peak between 4:00 p.m.-8:00 p.m. during the second half of the year ... Over [a] five-year period, peak loads have also generally shifted later in the day," NSTAR said

"The LMP data is even less conclusive. The highest-priced hours are roughly equal between 4:00 p.m.-8:00 p.m. and 5:00 p.m.-9:00 p.m., and several high-priced hours also fall between 6:00 p.m.-10:00 p.m.," NSTAR said

In separate comments, National Grid also reported difficulty in selecting a peak period for TOU rates

Among other things, National Grid said, "it is notable that high demand hours show a relatively flat profile and span a window longer than four hours, creating a likelihood that a TOU period ending at 8PM will simply lead to load shifting that creates a similarly sized peak or larger peak immediately following the period. Moreover, such a response increases the risk of amplifying peaks on the Company’s distribution system, which already typically peaks later than ISO-NE."

National Grid also said, "While hours ending 6 PM and 7 PM clearly have the highest DA LMPs, it is notable that DA LMPs are quite similar in hour ending 9 PM and hour ending 4 PM, suggesting that a 4 to 8 PM period may be insufficient to capture high-cost hours."

National Grid further said, "Winter LMPs complicate the potential for a single peak and off-peak period to deliver energy cost savings ... [A]verage DA LMPs in January 2024 and 2025 show bimodal peaks, with slightly higher prices observed in the morning hours, even though demands were on average slightly lower during the morning than evening. Exclusion of such high price hours from an on-peak period risks increasing usage during morning hours and driving up energy costs, and potentially local distribution system peaks, as heating electrification increases."

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