Massachusetts Supports Customer Choices with Default Service Order

May 2003

The Department of Telecommunications and Energy (DTE) recently supported the development of a stronger retail electric market in their default service order 02-40-B. "The purpose of this proceeding is to ensure that the manner in which default service is provided is compatible with the development of an efficient competitive market so that the benefits of a competitive market are available to all Massachusetts consumers."

Commenting on the state of the national market for electricity choice, DTE Commissioner Paul Vasington recently said: "Within 10 years more interest in electric choice will re- emerge. States that stuck with it and did it right like Massachusetts will be laboratories where others observe and say, 'yes, choice works.' Currently, 46% of large C&I load in competitively supplied in Massachusetts - a great success story that will continue to build."

Default Service Price to Include Wholesale and Some Retail Costs

Reversing an earlier decision, wholesale and retail costs will now be explicitly included in the utilities' price of default electric service. Now "procurement-related wholesale costs" and "direct retail costs associated with (1) unrecovered bad debt, (2) complying with the Department's default service regulatory requirements and (3) compliance with the Renewable Portfolio Standard" will be included. Other retail costs that reflect competitive market conditions are not included, which will continue to act as a barrier to choices for small customers. Nevertheless, we applaud the DTE for a significant step to support competitive retail markets.

Green power is popular among residential customers, but competitive retail offerings for residential customers have lagged burgeoning commercial and industrial retail offerings. In response, the DTE order supports the concept of utilities offering a menu of competitive green power options in conjunction with competitive suppliers. Such a program is now offered in New York.