Old Electric Industry

Until now, your electric utility has been responsible for all aspects of electric service. Utilities were responsible for all aspects of electric service. Utilities were responsible for generation of electricity from plants, and the delivery of the power to customers. Since utilities were monopolies, that is they were the only providers, the prices for electricity were regulated by the Department of Telecommunications and Energy (DTE), formerly the Department of Public Utilities.

The Change

On November 25, 1997, legislation was signed that changes the electric industry and provides every utility customer in Massachusetts with the opportunity to buy electricity in the competitive power market. The basic intent of the law is to introduce competition and provide consumers with choices and lower prices while assuring continued reliable service.

The New Electric Industry

The combined services that were provided by your utility are being divided into parts. The delivery of the electric power will remain the responsibility of your local electric company, now called adistribution company. However, the power will be sold by competitive firms. You will be able to choose the company which generates or supplies your power. The prices that these competitive power suppliers charge will not be regulated; instead they will set their own prices just like the sellers of most other products that you buy.

Buying electricity is now more like catalog shopping. Another way to think about the changes to the electric industry is to think about buying clothes from a catalog. When you buy a shirt from a catalog, the catalog company supplies the product - the shirt. But a separate company delivers the shirt to your home. With electricity, you will buy the product (power) from a competitive power supplier, but your local utility, the distribution company, will deliver the product to you. There are separate charges for the product and for the delivery of the product.

What The Change Means

Customers are free to choose a competitive power supplier at any time starting March 1, 1998. Your electricity will stay on no matter which competitive power supplier you choose. You may choose a competitive power supplier, join a buying group known as an aggregator, or choose to wait. You may wait to choose a competitive power supplier for as long as seven years. Until you choose, you will receive electricity from your local distribution company under a standard service transition rate called Standard Offer Service.

Standard Offer Service

The Standard Offer is the price at which local distribution companies will provide electricity to their customers who have not chosen a competitive power supplier. This price may be set initially between 2.8 and 3.2 cents per kilowatt hour. However, it will increase over time.

The standard offer price is the price for just the generation portion of the bill. You will also pay delivery charges, which will be the same whether you take the Standard Offer or choose to buy power from a competitive power supplier.

10% Savings

Customers taking the Standard Offer will see a decrease in their electric bill of at least 10% for usage after March 1, 1998. This reduction applies to the entire bill. However, your bill is determined by both the rate and the amount of electricity used. If you use exactly the same amount of electricity every month, your bill will be 10% less. If you buy from a competitive power supplier, your savings may vary based on your supplier's price.

Aggregators

Aggregators are buying groups that are formed to help members buy electricity in bulk and offer it to members at prices that may be lower than they as individuals are able to get on their own.

The New Law

• Enhances all the current consumer protections
• Continues special rates for lower income consumers
• Requires all competitive power suppliers to be licensed by the DTE
• Increases energy efficiency programs
• Affords protections to utility workers whose jobs may have been affected
• Protects the property tax receipts of communities which may be affected by the sale of power plants

Whom Do I Call ?

You will continue to call your local distribution company if your power goes out They will continue to read meters and maintain the transmission and distribution systems. You should see no change in the reliability of electric service.

Consumer fraud protections and dispute resolution are still available from the Massachusetts Attorney General's Office and the Consumer Division of the Massachusetts Department of Telecommunications and Energy.

A consumer guide to understanding changes in the electric industry in Massachusetts will be available after March 1, 1998, from the Massachusetts Division of Energy Resources. Look for more information in your March bill.