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Unitil settlement proves Healey wrong

By Dan Allegretti

After nearly three years of asserting that utility basic service is always a better deal for residential consumers than retail choice, Massachusetts Attorney General Maura Healey just proved herself spectacularly wrong. Here’s what happened.

On October 22, 2021, the Massachusetts Department of Public Utilities approved a settlement agreement between electric utility company Unitil and the Massachusetts attorney general’s office setting Unitil’s basic service rates. These are the rates paid by Unitil delivery customers who do not choose to buy electricity from a retail provider.

Normally, this would be a perfectly routine proceeding. This time, however, Unitil’s cost of basic service for the period December 1, 2022, through May 31, 2022, more than doubled due to two factors related to the timing of their power procurement. The first is a general increase in the price of natural gas for this upcoming winter as the economy recovers from the pandemic. The second is an inherent risk with basic service, which is the possibility for customers to come and go. In the case of Unitil, a customer aggregation program in the works by the city of Fitchburg forced Unitil to procure supply for the winter without blending the cost with non-winter months.

Steep increases like this are often referred to as “rate shock” and neither Unitil nor the attorney general can be faulted for wanting to mitigate the impact of such a sudden and steep rate increase. However, the “solution” they proposed, and which the Department of Public Utilities approved, completely undercuts Healey’s continued assertions that residential customers are better off having their choice of provider taken away and only being allowed to obtain service from a single source – the utility.

Here’s how Healey and Unitil “solved” the problem of rate shock in their now-approved settlement agreement. Unitil will collect less than its full cost in the winter basic service rates and defer an estimated $3.2 million balance for collection later. The kicker is that these deferred costs won’t just come from basic service customers but from all Unitil delivery customers, including those enjoying lower prices from their retail providers.

This is where the attorney general egregiously undermines her own cost-based critique of electric choice. Not only are Unitil customers who chose their own supplier getting a better deal this winter, but under the AG’s settlement, they will be compelled to pay a surcharge to subsidize the dramatically more expensive basic service option from the utility.

The Retail Energy Supply Association has repeatedly pointed out that selective snapshot comparisons of historic prices are not the proper way to assess the value of electric choice. The big picture is what matters. The ability to lock in a known price in the future, to take advantage of innovative and unique offerings and to take control and manage the cost and source of one’s energy supply are the real and compelling reasons to preserve retail choice. What happened here in the case of Unitil aptly proves this point.

Dan Allegretti is a spokesman for the Retail Energy Supply Association, which represents competitive suppliers of electricity and natural gas.

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