Electric customers in Massachusetts have the choice to purchase electricity generation from a competitive supplier. Basic service is provided by distribution companies to those customers who are not receiving service from a competitive supplier. If a customer takes no action to choose a competitive supplier, the customer will “default” to basic service. As such, basic service acts as a "generation service of last resort."
Please remember that a customer that is connected to a distribution company's system will receive electric service from the distribution company (e.g. the delivery of the electricity to the customer), regardless of the option under which the customer is receiving generation service. However, the price that the customer pays for electricity supply is dependent on the type of generation service the customer is receiving.
Each distribution company procures basic service for its customers through competitive solicitations. The Department reviews and approves the results of these solicitations. Basic service customers can choose one of two price options: (1) a variable pricing option in which the price changes monthly; and (2) a fixed pricing option in which the price remains constant for a fixed period, which depends on the customer class.
Residential and Small Commercial and Industrial Customers:
Each distribution company procures 50 percent of its basic service supply semi-annually. The fixed pricing options for these customers changes every six months. Basic service prices for these smaller customers (for both the variable and the fixed pricing options) are based on an average of the results of two separate procurements. This strategy protects residential and small commercial and industrial customers from large market fluctuations.
Medium and Large Commercial and Industrial Customers:
Each distribution company procures 100 percent of its basic service supply requirement for three-month terms. As a result, the fixed price option for these larger customers remains constant for a three-month period. This strategy is intended to mimic the fluctuations in the market. The Department intentionally set a three-month procurement period for these customers in order to balance risk for the customers on basic service with the goal of an effective and efficient competitive supply marketplace.
This information is provided by the Department of Public Utilities