State Proposes Making Default Service a Time-Based Rate; Offering Two TOU Options to Non-Shopping Customers

The Massachusetts DPU has issued an "anticipated policy framework" for dynamic pricing which would require basic service, or default service, to include a time-based component, and would require EDCs to offer customers two forms of time-based basic service (with traditional flat rate basic service no longer offered).

"A change in the design of basic service is necessary to ensure that all customers will be able to take advantage of the benefits of time varying rates," the DPU said.

The default basic service product is proposed to be a Time of Use rate with critical peak pricing. This rate would establish two TOU periods, on-peak and off-peak, with basic service rates for each period fixed for 6-month periods. However, for certain critical peak events, of which customers would be notified in advance, a much higher critical peak price would replace the otherwise applicable TOU rate.

Customers will have a second option for basic service which they must affirmatively elect: a flat rate with a peak time rebate. This is essentially identical to current basic service design, except that it includes the added value of a peak-time rebate, which rewards customers for usage reductions during called events, with no penalty for non-response.

Under the proposed dynamic pricing framework, the DPU anticipates that it will address specific rate design and implementation details through future stakeholder processes.

The DPU is accepting comments on the anticipated policy framework (D.P.U. 14-04-B)

In a separate order (D.P.U. 12-76-B), the DPU ordered electric utilities to submit plans to achieve advanced metering functionality within five years of DPU approval of each utility's grid modernization plan. "We note that the actual date for achieving advanced metering functionality will be significantly longer than five years, due to: (1) the nine-month time period for GMP development (discussed in Section VIII.A, below); (2) the time required for interim steps before the nine-month timeline is triggered (i.e., completion of the Department’s benefit-cost analysis working group and issuance of a final Order in the TVR proceeding, as discussed in Section VIII.A); and (3) the time required to review and adjudicate GMPs," the DPU said.