Massachusetts Approves Alternative Default Service Procurement Process at Nstar, WMECO

The Massachusetts DPU has approved an alternative methodology for procuring basic electric service supplies at Nstar and Western Massachusetts Electric Co. for large C&I customers, after the utilities' solicitation of load following supplies for the third quarter of 2014 failed to attract any bidders.

The utilities said that it was the first time that a basic service solicitation for either of the companies failed to result in any bids to serve Large C&I load

The DPU granted the utilities' request to serve Large C&I basic service through the ISO-NE day-ahead market for the three-month period beginning July 1, 2014, with customer prices based on monthly forecasts of day-ahead prices.

"To implement the alternative plan, the Companies will first estimate a price for each month for each load zone (WMECO, SEMA and NEMA) for full requirements load following service. The estimation process will compare NYMEX prices to corresponding Basic Service prices to calculate a ratio of Basic Service price to the NYMEX price for the last two corresponding historical quarters. In the case of setting rates for Q3 2014, the Company will use Q3 of 2012 and Q3 of 2013 for comparison, and that ratio will be applied to the NYMEX forwards for Q3 2014. This process results in the prices that will be charged to each Large C&I customer under this alternative plan," the utilities said.

The utilities' actual costs to serve the Large C&I load will be based on the actual market prices in the day-ahead market. On a regular basis, the utilities' actual costs for all components of full requirements load following service will be compared to the revenues collected based on the estimated prices charged to the Large C&I customers, to reconcile the net costs to zero.

The utilities received approval to reconcile the revenues and costs associated with this alternate plan for basic service procurement from all distribution customers, "consistent with Department precedent."

The prices for Large C&I basic service for the July to September 2014 period approved by the DPU are (¢/kWh):

Nstar (Rates G2, G3, T2)

Monthly Rates
Zone      July    August    September
NEMA     8.953     8.261     7.274 
SEMA     9.044     8.293     7.303 

Fixed Rate Option
Zone      July - September
NEMA         8.161
SEMA         8.200



WMECO (G-2, T-4, T-2, T-5)

Monthly Rates
Zone      July    August    September
WMECO    9.114     8.470     7.475

Fixed Rate Option
Zone      July - September
WMECO        8.405