'It's a big deal' says Rep. John Barrett of the DPU's decision to split January and February electricity rates - Berkshire Eagle

'It's a big deal' says Rep. John Barrett of the DPU's decision to split January and February electricity rates | Local News | berkshireeagle.com

In an effort to smooth out electricity rates year-round, the state Department of Public Utilities is ordering Eversource and National Grid to allow for a mid-winter adjustment in electricity rates.

As a result of the order issued Tuesday, small business and residential customers in Massachusetts will now see prices of electricity held in place during two six-month periods: one from February through July, the other from August through January.

“In recent years, January and February have been the months in which wholesale electricity prices are highest,” the DPU said in its order, released Tuesday. “Specifically, the fixed-rate 'winter' periods that include the months of January and February have had significantly higher rates than the 'summer' periods that do not.”

The state Department of Public Utilities is splitting residential bills into two six-month rate periods — one from February through July, the other from August through January.

The order resulted from a DPU investigation that started in January. One of the goals was to even out price volatility in electricity rates. No one seems to be know whether the change will save customers money, but one legislator believes it will.

“This is a big deal,” said state Rep. John Barrett III, who penned a letter to the former DPU chair in January, which was signed by a total of 94 legislators. That letter sought a mid-winter reconsideration of electricity rates after the price of natural gas first rose and then dropped midwinter.

“Last year is a classic example,” Barrett said. “People saw the increase go up. It was just astronomical. And the electric company came back and says, ‘Hey, we can’t lower them. We've got a six-month winter rate.’”

In addition, the DPU is requiring the rate periods for large business customers to be from February through April, May through July, August through October, and November through January.

National Grid customers currently pay 14.1 cents per kilowatt hour as its basic service rate. The winter rate was 33.9 cents. Last summer’s rate was 11.5 cents. These figures don’t include supply fees.

National Grid customers currently have winter rates set from November through April and summer rates from May through October. National Grid basic service rates will move to the new schedule in 2024.

“We are pleased that the Department acted expeditiously ahead of this coming winter season and believe that the approved changes to the procurement schedule will help reduce price volatility for customers, while maintaining a secure and reliable supply of electricity for basic service,” John Lamontagne, a spokesman for National Grid, said Tuesday. “We look forward to continuing to engage with the Department and work with the state’s other utilities as the review continues.”

Eversource’s current schedule is January through June and July through December.

The basic service rate for Eversource residential and small business customers will change as usual on Jan. 1, 2024. The next time it will change be on Aug. 1, 2024, beginning the new six-month cycle under the DPU’s order.

Eversource’s basic service rate went from 21.99 cents per kilowatt-hour to 14.85 cents as of July 1, compared to 15.4 cents last summer, for customers in Western Massachusetts.

“The unprecedented volatility in the global energy supply markets has had a significant impact on our customers, and we’ve been working with the DPU through this docket to evaluate the procurement process and schedule,” Eversource spokesperson Priscilla Ress said Tuesday. “As we transition to this new schedule, we continue to focus on supporting customers who may be struggling with their energy bills with our various payment plans, assistance programs and energy efficiency solutions.”

Not everyone is in favor of this plan. Constellation Energy, NRG Retail Companies, RESA and Vitol opposed it.

“While well-intentioned, the proposal would likely result in higher basic service rates,” the companies said, according to a summary of their comments within the order. “Buying and selling January and February as individual months on a forward basis is more difficult and expensive than transacting both as a package.”

In addition, “splitting these months into two separate basic service procurement periods would increase wholesale suppliers’ transaction costs and risks in procuring supply, leading to increased prices for basic service supply,” the companies said, according to the summary of their positions in the order.

“This potential unintended consequence is a concern to the Department,” the DPU’s order states.

However, the commenters did not further substantiate that claim, as requested. Given that, “The Department does not have sufficient information that demonstrates the proposed change in rate schedule will result in increased costs to customers,” the order said.

Assistant Attorney General Jacquelyn K. Bihrle subscribed to the theory that separating January and February will decrease price variability and said that the market would adjust to the demand from Massachusetts.

“In sum, speculative and unquantified concerns about potentially increased risk premiums and/or increased risk of failed solicitations should not deter the Department from implementing its policy preference for increased basic service rate stability, a preference which is shared by a broad base of stakeholders,” Bihrle wrote in her comments July 6.

“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 in announcing the order. “Today’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.”

Karen Schiltz, who lives in Windsor with her son and has been struggling to pay electricity bills since she moved to Pittsfield, said she is not confident that the schedule shift will keep her electricity rates in check.

“I’m very cynical,” Schiltz said. “I hope I’m wrong. I would love to be proven wrong.”