Massachusetts utility overseers on Friday ordered Eversource and National Grid to split two of the coldest (and often most costly) months of the year into two procurement and billing periods, implementing an idea that Maura Healey's office proposed when she was attorney general eight years ago.
The Department of Public Utilities said that ordering two of the state's three electric distribution companies to change their basic service periods for residential and small business customers to the six-month periods of February through July and August through January "is expected to mitigate large seasonal changes in basic service electricity supply prices and differences across electric distribution companies."
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The third distribution company, Unitil, already uses that schedule. DPU said National Grid and Eversource supported the proposal.
DPU launched an investigation in early January and made recommendations related to the way that basic service (the default electric service provided to customers who have not selected a competitive supplier or joined a municipal aggregation program) is procured and priced by utility companies. The idea of having the distribution companies adopt the same six-month rate periods to smooth out some steep seasonal differences was among DPU's proposals.
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The Baker administration warned Bay Staters last fall to brace for "at best, a very high-cost energy winter" and it turned out that way. Natural gas customers saw a 28% increase in heating costs last winter, homes with electric heat watched costs soar 57% and the cost of heating a home with oil was up 63%, according to an analysis from the Department of Energy Resources.
"Due to our current reliance on fossil fuel generation, customers can experience significant volatility in electric supply prices," DPU Chair James Van Nostrand said Tuesday. "[Friday's] decision is an important step towards minimizing significant price swings for basic service customers, while we transition to clean energy sources that will not only help stabilize energy rates but also lower emissions and improve air quality."
When DPU in 2015 launched a similar investigation (which dead-ended by mid-2016), the attorney general's office under Healey made a similar proposal, saying that changing the rate periods "will reduce the extreme rate spikes" that particularly affected National Grid customers at the time. In March, the Healey administration replaced two of three DPU commissioners and charged the trio with creating a "21st Century DPU."
