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State kills rule penalizing utility-switching electricity customers

By: Shira Schoenberg |

The Massachusetts Department of Public Utilities has eliminated a controversial rule that required utilities to retroactively recalculate the bills of customers who switch electricity suppliers, effective immediately.

“The Department eliminates the basic service bill provision, effective as of the date of this Order,” DPU officials wrote in an order released Monday. “Electric distribution companies shall not recalculate customer bills for customers who switch from basic service to competitive supply service.”

The bill recalculation rule was created in 2000 as part of a move to allow competition among electricity suppliers. With high energy prices and a cold winter this year, it began having a significant impact on customers, particularly those in Western Massachusetts, causing an outcry among some customers and state lawmakers.

“My colleagues and I who were involved from the beginning are very pleased to hear this news,” said State Sen. Don Humason, R-Westfield, who organized a group of Western Massachusetts lawmakers to ask the DPU to repeal the regulation.

Humason said he got involved in the issue after hearing complaints from constituents. “It’s proof that a small group of people can do a good thing by calling it to the attention of the administration and the department and the attorney general’s office,” Humason said.

The issue stemmed from a situation in which the utilities provide basic electricity service to residential customers and small businesses, generally at a fixed rate for six months. This lets utilities average out the winter months that have high energy costs and the summer months that have low energy costs.

But if someone switched to another supplier in the middle of the rate period, their earlier bills were recalculated to reflect the actual cost of energy for the months they received basic service. The goal of the rule was to prevent customers from constantly switching from basic service to competitive suppliers, depending on whether energy costs were high or low that month. Some western Massachusetts customers were seeing average retroactive bills as high as $144 in March.

In December, the DPU wrote that it was considering eliminating the “bill recalculation” rule as part of a broader initiative to improve regulation of electricity suppliers. DPU Chairman Angie O’Connor said last month that the department would expedite its consideration of the rule due to the public concern.

According to the order, the DPU will track the effects of eliminating the rule to determine whether customers end up gaming the system and to see if any additional action is needed.

Attorney General Maura Healey said she is happy with the DPU’s decision and with the creation of of a tracking mechanism.

“I applaud DPU’s decision to eliminate the utility recalculation requirement, which has led to unexpected increases in electricity bills for individuals and small businesses this winter,” Healey said in a statement. “I am pleased that the DPU has also agreed to track the results of this change to help ensure that all customers are treated fairly in this process. On behalf of ratepayers across the state, our office will continue to work to mitigate rate hikes in Massachusetts, push for transparency and make sure consumers are educated about energy costs.”

The utility companies were split on whether to eliminate bill recalculation. Eversource wanted to eliminate the rule; National Grid favored keeping it.

“This is good news and we’re pleased at the Department of Public Utilities’ decision to immediately eliminate the bill recalculation provision,” said Priscilla Ress, an Eversource spokeswoman. “We’ve been clear about our support for this change and feel it will help eliminate confusion for customers who choose to switch to a competitive supplier.”