Massachusetts

Restructuring Overview  |  Public Benefits  |  Restructuring Resources  |  Consumer Protection  |  News and Analysis

Legislation Passed
Electric Y Gas N

1997, HB 5117 Chapter 164; Initial Restructuring Bill

Electric
Overview

• 1997: The Massachusetts restructuring statute created two services: standard offer service and default service. Standard offer service is provided by existing utilities to all customers who choose not to choose, and this service provides for rate reductions (10% in year one and 15% beginning on September 1, 1999). Standard offer service is available only for the transition period of seven years (until March 1, 2005).
• Customers who leave standard offer service for a competitive energy supplier and then returned to regulated service or who were not customers as of March 1998 are not eligible for standard offer service and must take default service. Those customers typically pay about 20% more than standard-offer customers. Under the terms of the restructuring legislation, however, low-income customers who participate in low-income rate discounts offered by all utilities remain exempt from default service prices and receive standard offer service.
• June 2001: The Massachusetts Department of Telecommunications and Industry, seeking to boost customer participation in the open electricity market, issued an order for utilities to release, with customer approval, default customers' information to competitive suppliers. Suppliers may request names, addresses, and rate classes of default service customers. Customer lists with name, address, and some sort of rate designation were released to suppliers without a formal program of customer notification and opportunity to "opt out." In October 2001, the DTE adopted an "opt-out" system allowing customers to prevent the release of their usage information by contacting their local utility.
• October 2001: The DTE approved a proposal by the Cape Light Compact Municipal, an aggregation of 21 towns and two counties, to begin a 15-month pilot project to procure electricity for its 42,000 default service customers.
• March 2002: Massachusetts Electric Company and Nantucket Electric Company announced that they will pay $1.9 million in refunds to 14,000 customers who were overcharged because they were improperly switched from standard offer service to the more expensive default service.
• July 2002: The DTE issued Order #01-54-B, one of several stemming from its year-long investigation of Competitive Market Initiatives, the objective of which was to "minimize or eliminate any barriers to competitive choice," and to "identify and implement initiatives that [will] expand the range of competitive options available to consumers." The order rejected, at least temporarily, several suggestions to "kick-start" the competitive market by moving customers from default or standard service into the competitive market. The DTE also opposed a proposed program in which distribution companies would obtain authorization from default customers to switch the customers to competitive supply. Finally, the DTE rejected a proposal to allow distribution companies to directly assign default customers to competitive suppliers.
• October 2002: The Massachusetts Department of Telecommunications and Energy (DTE) approved Massachusetts Electric Company's request for a reduction in default service rates. The reduction is a result of a recent decline in the price of wholesale electricity. Effective November 1, the typical residential customer on the fixed-price default service rate using 500 kilowatt-hours of electricity will see a 9.2% reduction in their overall monthly bill.

Choice Status

• As of May 2003, 56,882 residential customers, or 2.5% of total residential customers, had signed on with competitive suppliers; 1,514,035 were on standard offer service, and 657,444 were on default service.

Natural Gas
Overview

• On July 18, 1997, the Massachusetts Department of Telecommunications and Energy directed natural gas companies operating in the state to develop a common set of principles for the comprehensive unbundling of the state's natural gas industry in order to introduce supplier competition, while preserving existing low-income discounts. Rules governing that process were adopted in 2000.
• Statewide unbundling was scheduled to begin in 2000, but as of November 2002, none of the licensed marketers in the state has indicated interest in serving the residential market.

Choice Status

• All residential customers in Massachusetts now have access to competitive suppliers. However, most suppliers are not interested in residential customers.

Choice education
The Power is Yours
www.state.ma.us/thepower/index.htm
This state website features an explanation of electric restructuring in Massachusetts, along with an outline of consumer rights and an example of the kind of bills suppliers might send. The site includes an updated list of suppliers offering service to residential customers.

Suppliers
www.state.ma.us/thepower/index.htm

Public Benefits

Massachusetts' restructuring law required electric investor-owned utilities to collect separate per-kWh charges to fund energy efficiency activities, including low-income energy efficiency, and renewable energy projects. It also continued and expanded the state’s low-income utility discounts, amounting to about $34 million yearly (electric and gas utilities), and established a low-income conservation fund. Total funding averages $160 million yearly, of which $130 million is for energy efficiency (including $10 million for low-income), and $30 million is for renewable energy programs. (Click here for details on the state’s low-income energy and general residential energy programs.)

Aggregation

• All private, non-profit or cooperative aggregators must obtain a license from the Department of Telecommunications and Energy. Each customer choosing a generation company, supplier, or aggregator to provide power or other services is required to choose such entity by either a letter of authorization or third party verification.
• Any for-profit corporation, non-profit corporation, or quasi-public authority is authorized to establish a corporate retail load aggregator to purchase electricity to serve affiliated corporations or business units.
• Any number of persons may form a cooperative to purchase, distribute, sell or supply energy or energy-related services to wholesale or retail customers. Any entity may be a member of such a cooperative, except for customers served by a municipal light plant.

Municipal Aggregation

• A municipality or group of municipalities acting together is authorized to aggregate the electrical load of consumers within its boundaries. However, a municipality or group of municipalities cannot aggregate electrical load served by an existing municipal light plant.
• A town may initiate a process to aggregate electrical load when authorized by a majority vote of a town meeting or town council. For a city, authorization is required from the city council, as well as approval by the mayor or city manager. After the process is authorized, the municipality must develop a plan that includes the organizational structure of the program, its operations, funding, rate setting and other costs to participants, methods for entering and terminating agreements, rights and responsibilities of participants, and termination of the program.
• The plan must be filed with the Department of Telecommunications and Energy for review and approval and the Department must conduct a public hearing. The Department cannot approve a plan if the price for energy would initially exceed the standard offer price, unless the applicant can prove that prices in subsequent years will be lower than the standard offer, or that the excess price is caused by the purchase of renewable energy.
• Participation in a municipal aggregation program is voluntary. The municipal aggregator must advise ratepayers in advance of automatic enrollment of their right to opt-out without penalty. Any retail customer can opt-out within 180 days of automatic enrollment.

State Restructuring Resources

Utility Regulatory Commission
Massachusetts Department of Telecommunications and Industry
1-800-323-3298
http://www.state.ma.us/dpu

Consumer advocate
Consumer Affairs and Business Regulation
1-888-283-3757
www.state.ma.us/consumer/Info/energy.htm

Office of the Massachusetts Attorney General
617-727-2200
www.ago.state.ma.us/

Massachusetts Department of Telecommunications and Industry
1-800-392-6066

Grassroots groups
Mass Energy Consumer Alliance
1-800-287-3950
www.massenergy.com/
Mass Energy is a statewide nonprofit organization that combines advocacy and market based solutions on behalf of consumers and the environment. It sponsors a discount heating-oil buying network in eastern and central Massachusetts and offers discount energy efficient products. The group is now working to pool consumer demand for clean renewable power.

Massachusetts Community Action Program Directors' Association
617-357-6086
www.masscap.org/
MassCap is a statewide association of the state's 25 community action agencies that lobbies for state-funded heating assistance of low-income consumers and for extending energy efficiency programs for low-income households.

Consumer Protection

Disconnection policy

• Between November 15 and March 15, service cannot be disconnected if the service has not been shut off for nonpayment before November 15.
• No company may shut off or refuse to restore utility service to the home of any customer if the customer or someone living in the customer's home is seriously ill, or if a child under the age of 12 months lives in the household and the customer's service was not shut off for nonpayment before the birth of the child, or if the customer is unable to pay any overdue bill because of financial hardship,
• Each company must devise procedures and methods designed to identify, before termination of service for non-payment, households in which all residents are 65 years of age or older. A company may terminate service to a household in which all residents are 65 years of age or older only after securing the written approval of the Department of Transportation and Industry.
• Customers cannot be disconnected if they have a pending complaint about failure to pay disputed amounts.
• Notice must be sent at least 72 hours, and no more than 14 days, before disconnection.

• Suppliers must provide a financial history, evidence of financial capability to provide service and attend competitive supplier training sponsored by a Massachusetts energy distribution company. The applicant must also provide a sample of a customer bill and post a $100 filing fee.

Slamming

• A competitive power supplier may not switch customers to its service without their consent. Customer consent must take the form of either a written letter of authorization signed by the customer or the customer's oral statement to an independent third party, such as a separate verification company.

• If it is determined that customers were switched without their consent, the supplier must refund the difference between what the customers would have paid their previous supplier and the charges they paid to the supplier who switched their service. The supplier must also refund any reasonable expenses the consumers had to pay in switching back to their previous supplier, as well as refund to the previous supplier the revenue the previous supplier would have received from the customers if they had not been switched.

Dispute resolution

• The MDTE can investigate and establish compliant resolution procedures, impose fines for violations of market power abuse provisions, and establish an alternative dispute resolution.

Disclosure

• Competitive power suppliers and distribution companies providing the standard offer service must furnish customers with a disclosure label before providing service and on a quarterly basis after that. The label must set forth prices, the types of power sources used, their air emissions, their labor practices and a toll-free number for customer service. The same format of information is to be used by every supplier and distribution company, making it easier to compare the various offers.

Advertising/marketing/trade practices

• All advertisements have to comply with state and federal advertising regulations. On printed or Internet materials, the electricity rate to be charged must be shown in bold print. In television or radio announcements, the rate must be stated in clear and deliberate speech. In any written marketing materials, there must be a prominent statement that a retail customer may obtain an information disclosure label upon request. Non-print media must also indicate clearly that a retail customer may obtain an information disclosure label upon request.
• The MDTE can investigate and require suppliers to submit to arbitration at the request of complainants for violation of deceptive trade practice provision.

Privacy

• An electric supplier must have written authorization from a customer before it can request that customer's historic usage information. Suppliers can release that information to other suppliers once the customer has signed the authorization form.