Utility regulators say skyrocketing energy costs out of their hands

By SCOTT MERZBACH

Staff Writer

Published: 01-27-2023 6:09 PM

Mandated reductions to natural gas supply rates going into effect Feb. 1, an investigation into the procurement and pricing of electricity services, and promoting programs that help customers pay their utility bills are among steps being taken by the state’s Department of Public Utilities to cut energy costs and assist consumers, according to a letter sent to legislators this week.

“The department and the Healey-Driscoll Administration share your concern about the impacts that energy supply costs are having on the ability of Massachusetts residents and businesses to afford their utility bills,” DPU Chair Matthew Nelson wrote in the correspondence, which comes in response to an appeal from more than 90 legislators seeking to compel public utilities to cut their winter energy rates.

The rationale from the legislators is that electricity costs should come down because the summer’s high oil prices have declined substantially, and the DPU should therefore reexamine the electricity rates that were approved for Eversource, National Grid and Unitil. National Grid’s rates were estimated to increase by 64% and Eversource’s rates were to go up by 43%.

Sen. John Velis, D-Westfield, issued a statement this week that “any opportunity we have to lower these rates and help folks out, we absolutely need to take a look at.”

Rep. Mindy Domb, D-Amherst, was among those who signed on to the letter.

“I would hope they would recognize that as a decision-making body that they can use real-time information to course correct,” Domb said.

But while the DPU is exploring opportunities to modify existing basic service procurement practices, with an investigation opened on Jan. 4 into the procurement and pricing of basic service electricity, immediate relief is unlikely, as the DPU does not have the ability to set the price for electric supply costs.

While electricity delivery costs are regulated by the DPU, supply costs are not similarly regulated, Nelson wrote.

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As legislators pointed to oil as the culprit, the DPU cites large spikes in supply rates, including basic service rates, as being caused by wholesale energy market dynamics, including the war in Ukraine, regional natural gas transportation constraints and uncertainty in customer load.

Even while natural gas prices can fluctuate, the electricity basic service rates are established by contracts based on a competitive solicitation, and these prices remain fixed over the term of the contract.

“In contrast to gas supply rates, electric basic service rates do not change during the winter period because they are based on fixed contracts,” Nelson wrote. “Since the Legislature enacted the Massachusetts Electric Industry Restructuring Act in 1997, which introduced competitive supply in the retail electric markets, the department and the electric distribution companies do not control energy supply costs.”

Similarly, Eversource noted the price of oil has little to do with electricity costs.

“New England relies heavily on natural gas to generate electric supply, which is why that is consistently cited in all of our news releases and statements, and not oil,” said Christopher McKinnon, a spokesperson for Eversource.

As far as what can be done, the DPU notes that, consistent with its rules, all the Massachusetts gas distribution companies submitted amended filings to the department that decrease customers’ gas supply rates beginning next month.

DPU officials also met with all electric and gas distribution companies last June to direct them to promote and allow residential customers to enroll in budget billing programs throughout the winter; guide customers who have difficulty paying their bills toward assistance programs, such as management plans for unpaid balances and the Low-Income Home Energy Assistance Program (LIHEAP); and continue their efforts to increase education regarding energy efficiency, particularly for low-income customers.

Danielle Burney, a spokesperson for the DPU, issued a statement from Rebecca Tepper, energy and environmental affairs secretary for Massachusetts, on behalf of the governor’s office that outlines ways for people to reduce utility bills, and the work underway to advance energy efficiency programs to directly benefit ratepayers.

“Importantly, Gov. Healey has pledged to double the commonwealth’s offshore wind and solar targets,” Tepper said, “and quadruple its energy storage deployment, which will provide ratepayers with clean, affordable energy for many years to come.”

Scott Merzbach can be reached at smerzbach@gazettenet.com.

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