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Gas Deregulation Schedule Set in MA

Gas Deregulation Schedule Set in MA

The Massachusetts Department of Telecommunications and Energy (DTE) sent an order (File # 98-32-B) last Wednesday to all 10 state gas utilities, requiring them to deregulate service to residential customers by 2004. The order directed gas utilities to work with marketers on planning for a competitive market during the five-year transition. After the first three years of the program, the DTE said it will review the situation to determine if additional efforts are needed to help spur competition. Massachusetts commercial and industrial consumers have had gas customer choice since 1993.

"Consumers can already choose their long-distance telephone company and their electric supplier. Today's order begins to pave the way to the same choice for gas customers," said Janet Besser, chairperson of the DTE. "Informed choice leads to effective competition, lower prices and better service, the goal of all our regulatory efforts."

In addition to setting a five year schedule for gas deregulation, 98-32-B settled the controversial issues of capacity assignment and cost responsibility. A collaborative of all interested parties, who had worked together since July 1997 to help form a plan, was unable to find a solution regarding these two issues. "The marketers wanted one thing and the utilities wanted another," said George Yianco, a DTE spokesman. "They couldn't resolve the issues so they asked the DTE to decide."

The order calls for a mandatory, slice of the system approach to capacity assignment, which the DTE said will "enable converting customers to gain access to capacity, while maintaining reliability and avoiding improper transfer of cost responsibility." This approach, supported by utilities, requires customers to assume a share (determined by usage) of the LDC's existing contacts when the time comes to deregulate. Customers will also receive a "slice" of each contract to fill their gas needs. Marketers were lobbying for a voluntary system where customers only took what they need and left the rest to the utility.

"The order, although pleasing to utilities, is causing some grumbling by marketers. After the three-year trial, however, the DTE will re-evaluate to see if a switch to a voluntary method is more plausible," Yianco said. This order requires LDCs to procure upstream capacity for the first three years of the transition further protecting reliability, he added.

John Norris

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