Executive Order  No. 179: Electric utility fuel costs

Preamble

The economic welfare of the people of the Commonwealth is threatened by the high cost of fuel charges included in electric utility bills.

Massachusetts General Laws Chapter 164 Section 94G allows electric companies in Massachusetts to pass through to consumers the costs of fuel used to produce electric power and the cost of power purchased from other utilities in fuel clause proceedings separate from comprehensive rate cases.

The incentives for efficiency in fuel purchasing and fuel use by utilities provided by current fuel clause practices have been questioned. It is imperative that the people of the Commonwealth are assured that utilities select their mixture of fuel types and generation facilities, purchase their fuel and equipment, and maintain their fuel burning equipment to provide their customers with electric power at the lowest possible cost.

Order

In order to meet the above described concerns, I, Edward J. King, Governor of the Commonwealth, hereby order and direct the Secretary of Energy Resources to establish a Task Force to consist of representatives of utility customers, the Executive Office of Energy Resources, the Department of Public Utilities, Massachusetts Fair Share, electric utility management, and other interested groups to review and propose changes in the DPU regulatory process concerning fuel charges. Said Task Force shall report its findings to the Governor, the Department of Public Utilities, and the Legislature. An interim report is to be filed on December 1, 1980 and a final report on February 28, 1981. Such reports shall include proposals for such rules, regulations or legislation as the Task force determines may be necessary to carry out its recommendations.

Said Task Force shall examine procedures for the establishment of uniform fuel clauses applicable to all electric companies, and for the establishment of standards relating to efficiency of operation of utility plants.

Section 94G of Chapter 164 of the General Laws allows the Department of Public Utilities to establish factors in fuel clauses in addition to the cost of fuel. The Task Force will examine this existing authority and other relevant existing law to determine appropriate procedures to carry out the directives, of this executive order.

The chairman of the Department of Public Utilities shall utilize such funds, as deemed necessary, made available pursuant to the assessment of utility companies under Chapter 349 of the Acts of 1980 for the purposes consistent with this order, including hiring staff to review fuel purchase and use practices.

The procedures recommended by the Task Force shall be designed to minimize the cost of fuel used in the production of electricity consistent with minimizing the total cost of a reliable supply of electricity to the consumers of the Commonwealth.

In recommending changes in DPU procedures, the Task Force shall take care to avoid unduly restricting the flexibility of utility companies to purchase fuels on a spot or contract basis and to avoid imposing undue cost requirements of increased fuel-related working capital and fuel purchasing finance charges.

Given at the Executive Chamber in Boston this seventeenth day of July in the year of Our Lord one thousand nine hundred and eighty and of the Independence of the United States of America two hundred and fifth.

Edward J. King
Governor
COMMONWEALTH OF MASSACHUSETTS

Michael Joseph Connolly
Secretary of the Commonwealth