Energy Update: Standard Offer Phase Out
Overview
The transitional electricity service known as "standard offer" is coming to an end on March 1, 2005, and all customers on standard offer service at that date will be moved over to default/basic service. Medium and large commercial and industrial customers that have not moved to the competitive market will be paying electric rates more closely reflecting current market conditions - which at present will result in increases from the more tightly regulated transitional standard offer service price.
With the end of standard offer approaching, the desirability of considering competitive supplies and meeting with competitive suppliers takes on new urgency.
Each utility in Massachusetts will continue to purchase power for customers on default/basic service, i.e., those that have not gone to the competitive market for their electricity. Estimated bill impacts for small, medium and large commercial industrial customers are listed by company and pricing zone on the bottom of this page.
The higher prices under default/basic service are due in large part to the high cost of fuel - especially natural gas, which accounts for nearly half our generation. While the timing of the rate increases is attributable to the restructuring process (the phaseout of standard offer), rates would have been adjusted to reflect fuel costs under the prior regulatory regime as well.
Commercial and industrial customers with choice in the competitive market will find less volatility and more price stability in bilateral contracts with electricity suppliers. In spring 2005, NAIOP will provide its members access to an Associated Industries of Massachusetts series of educational seminars and supplier forums around the state, co-hosted with major utility companies, to give customers the information they need (including figures on their own electricity usage) to discuss competitive contracts, and provide an opportunity to meet with suppliers and marketers directly.
Background/Related Materials
Are lower electricity prices in your future? By Michael Vhay, Esq.
Associated Industries of Massachusetts
