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Electric companies raise rates

Utilities say increase will affect customers with default service

By Bruce Mohl, Globe Staff, 10/24/2000

undreds of thousands of Massachusetts electric customers are about to see their power prices jump 40 percent or more, as state officials allow utilities to pass along market increases in the price of oil and natural gas.

Utilities over the weekend began notifying customers on so-called default service that, starting Dec. 1, they will be paying market rates for their power. The transmission and customer-service portions of their bill will remain regulated and unchanged.

Industry officials say as many as a quarter of the state's electricity customers are on default service by virtue of opening an account with their electric company after March 1, 1998.

At Boston Edison, 300,000 default-service customers will see their rates rise from 4.5 cents per kilowatt hour to 6.28 cents per kilowatt hour. For a typical customer using 500 kilowatt hours a month, Boston Edison said the increase will amount to $8.90 a month, or 14.4 percent.

The price increase is even greater at other utilities. State officials said 200,000 Massachusetts Electric customers will see their power prices jump from 3.8 cents per kilowatt hour to 6.37 cents. At Commonwealth Electric, the power price will increase from 3.8 cents per kilowatt hour to 6.28 cents. A typical Commonwealth Electric bill will increase $12.41 a month.

Default-service customers will be faced with their first tough choices since electric deregulation started. They must decide whom they want to buy electricity from and under what terms and conditions.

Utility Web sites yesterday indicated most will offer their default-service customers power prices that would vary each month or remain fixed for six-month periods. Customers could also buy electricity from another company.

Harvey Michaels , chief executive of, which tracks customer energy offers, said he expects the new power prices to draw more electricity suppliers to the market and give consumers more options. He said it is unclear what companies will charge.

Customers on standard-offer service will see no immediate impact from the new market prices, although utilities have asked state regulators for approval to raise those prices as well to reflect the higher prices they are paying for oil and natural gas.

The Massachusetts Department of Telecommunications and Energy approved the price hikes last Thursday with no public announcement. Consumers began learning of the increases in notices from utilities over the weekend.

-- Martin Thompson (, October 24, 2000

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