|
Nov 22 - The Boston Globe
As area small business owners face electric rate increases of 50 to 80 percent this winter, utilities are putting some of the blame on big businesses and institutions that are exploiting the energy market. NStar, which serves Boston and 80 other Eastern Massachusetts communities, and National Grid USA, parent company of the former Massachusetts Electric Co., contend that small customers are paying the price for an unanticipated consequence of electric deregulation. Over the past two years, they say, some big utility customers have been jumping between competitive electric suppliers and the so-called basic service rate plans utilities must offer all customers. Some customers have switched as often as every two or three months to take advantage of short-term price drops. This is not illegal. But in a petition yesterday to state regulators aimed at cracking down on the practice, NStar said the strategy is driving up electric rates for small customers by as much as 5 percent. This is in addition to huge increases driven by soaring global energy prices and hurricane damage on the Gulf Coast to gas and oil supplies used for generating electricity. Smaller businesses are being hurt by "an unfair manipulation, or gaming, of the system that increases prices to customers who do not or cannot secure supply from the competitive market," said James G. Daly, director of electric and gas energy supply for NStar. For utilities, the problem with big businesses and institutions switching frequently in and out of basic service is analogous to a company renting out a restaurant each night but unable to tell the chef whether 50 or 100 people are coming for dinner. To cover the risk of not knowing its costs, the restaurant, or the energy supplier, raises prices. Smaller businesses have been essentially left out of the competitive power market because suppliers consider them unprofitable customers. As a result, many small businesses must take basic service from NStar or National Grid. Because it is confidential data, NStar is not allowed to identify the customers that have frequently switched suppliers, or the energy companies that it alleges are encouraging customers to take advantage of basic service during months they will save money by doing so. Competitive energy suppliers, however, insist the situation is nothing more than the free market at work and customers seeking the best deal they can. If the state begins to interfere in how and when customers can switch electric suppliers, competition will be dampened and prices could rise. "This could put up another barrier to competition, and it isn't good for the consumer," said Brian Casey, chief executive of SourceOne Inc., a Boston energy consulting firm that brokers electric supplies for clients. Under the state's 1997 utility-restructuring law, consumers and businesses pay utilities for transmitting and delivering power and can shop for the electricity they use from competitive suppliers. Utilities, however, must offer basic service to all customers. NStar and National Grid yesterday asked the Department of Telecommunications and Energy to restrict how often customers could switch. If the DTE adopted their plan, customers who used a competitive supplier but switched to utility basic service could not switch back to the same supplier until at least six months after they went on utility service. They could, however, switch to a different energy supplier. NStar senior vice president Joseph R. Nolan Jr. said the plan would preserve competitive choice in the market, and only prevent individual energy suppliers from temporarily putting customers back on utility service when that rate was more advantageous. But two big energy suppliers, Constellation Energy Group Inc. and Select Energy Inc., said they would oppose the NStar plan. "Customers like the situation the way it is, and they like being able to switch whenever they want to whomever they want," said Select vice president Steve Fabiani. Constellation vice president Michael Kagan said that "we're talking about a customer that is very savvy and sophisticated. There's a utility rate, and there's a wholesale rate, and they're going to get the lowest one," Kagan said, adding that many Constellation customers are watching energy prices more closely than ever. "People have a hard time paying twice as much for something as they did three years ago," he said. "They are watching the markets very actively." ----- To see more of The Boston Globe, or to subscribe to the newspaper, go to http://www.boston.com/globe .
|