MA DPU Orders Investigation for Basic Service Procurement
April 10, 2015
On April Ninth, the MA Dept. of Public Utilities ordered an investigation into the pricing and procurement of basic service electricity, affected by two key issues:
High Costs: Massachusetts faced historically high basic service costs over the past two winters, and the DPU will review a full range of possibilities for basic service procurement and pricing. The DPU will consider the layering approach including multiple solicitations performed in varying intervals and length as layers for greater price stability. Rhode Island employs this method for their equivalent to basic service, called standard offer service.
Reduced Basic Service Solicitation Responses: Utilities have received limited responses to basic service solicitations from wholesale suppliers, especially for industrial customers. Consequently, the DPU will consider providing utilities with greater caution and opportunity in their procurement methods while revising the “all requirements” obligation on all basic service suppliers. The DPU will review how suppliers allocate risk from wholesale market price discrepancies and supplier solicitation parameters, such as insulating them from variations in basic service loads to a certain fault.
Utility Companies and Interested Parties will present their responses to the DPU’s Investigation Tuesday May 19, addressing cost/benefit analysis for ratepayers, risk allocation, and possible effects of changes to basic service procurement on competitive supply markets.
For more information, read the full investigation here.
