Boston-based NSTAR Electric & Gas, which serves 1.4 million power and gas customers in eastern and central Massachusetts, said Friday the Department of Telecommunications and Energy (DTE) has approved a $20 million electric rate cut. As part of the settlement, the reduced rate will be frozen for seven years. The agreement also provides temporary rate relief of $18 million for NSTAR Gas customers, as well as new programs and incentives to improve system performance and customer service.

The average NSTAR Electric customer, who would have seen an increase of $1.67 a month under a rate increase, will now realize a savings of 46 cents/month. The average NSTAR Gas customer will save $8.93/month, effective immediately.

“At a time when customers are feeling the strain of high global energy prices, this settlement not only brings immediate relief, but it also offers long-term stability,” said NSTAR CEO Thomas J. May. “We’re very pleased that the DTE worked so diligently to approve this settlement just in time for January, typically one of the highest energy-use months.”

Other parties to the settlement include the Associated Industries of Massachusetts and the Low-Income Energy Affordability Network. Together with NSTAR and the state, the broad-based coalition reached the settlement as an alternative to an $89 million dollar rate increase for NSTAR. The company has invested more than $2 billion in its system over the last 10 years, however, to provide customers with some rate relief at this time of high energy prices, NSTAR agreed to adopt a non-traditional rate plan.

The settlement also calls for new service and reliability standards to bolster customer service levels. The company will be given incentives and penalties related to the reliability of the system and customers will be informed of system reliability through an annual report card from NSTAR. Other features include the creation of a debt forgiveness program for low income customers and the revision of certain NSTAR power purchasing practices to provide greater stability for energy prices paid by residential customers. The settlement also provides for NSTAR to spend $10 million on new safety and reliability initiatives, including a comprehensive manhole inspection, repair and upgrade program.

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