State Asks If Default Service Should Include "Menu" of Dynamic Pricing Options

The Massachusetts DPU has formally opened its previously announced investigation of dynamic pricing by seeking stakeholder comment on, among other things, whether default (basic) electric service should include a "menu" of time-based rate options.

Specifically, the DPU sought comment on the following:

• Should basic service become or include a time varying rate (or rates)? Why or why not?

• Different time varying rate structures provide varying levels of price signals, customer protections from price volatility, complexity, etc. In the event that basic service becomes or includes a time varying rate (or rates), should there be a single option or a menu of options (e.g., real time pricing, critical peak pricing, time of use, peak time rebate) and should a flat rate be included among the options? If basic service is a menu of options, should a time varying rate or a flat rate be the default rate?

• Should the Department consider an approach similar to the "Smart Energy Rewards" program offered by Baltimore Gas Electric, whereby the distribution company runs a peak-time rebate type program for all distribution customers, regardless of whether they are on basic service or competitive supply? If this is considered by the Department, should it be considered as a bridge to time varying rates?

• What is the likely impact on the competitive retail supply market if basic service becomes or includes a time varying rate (or rates)?

• What impact might the recent increase in municipal aggregations have on the Department’s ability to maximize the benefits of time varying rates?

• In the event that basic service becomes or includes a time varying rate (or rates), what role, if any, should distribution companies have in reaching, marketing to, and educating customers about time varying rates?

• In the event that basic service remains a flat rate product, will competitive suppliers develop time varying products and effectively market to and educate the public regarding the use and benefits of time varying rates?

• In the event that basic service does not include a time varying rate, what role, if any, should distribution companies have in reaching, marketing to, and educating customers about time varying rates offered by competitive suppliers?

D.P.U. 14-04