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<title>Massachusetts Proposed Regulations Require Disclosure of Price and Emissions
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<td width="69%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u>
<br>
<br>
February 1998</u><br>
<big><big><big>Massachusetts Proposed Regulations Require Disclosure Of
Price And Emissions Characteristics<br>
</big></big></big></b><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
03/98</em>)<br>
<br>
</font><font face="Arial">On January
16, 1998, the Massachusetts Department of Telecommunications and Energy (the
"Department") promulgated proposed regulations to implement retail competition
in the electric generating market which is scheduled to begin on March 1, 1998. The
regulations require that each competitive power supplier disclose certain information to
retail consumers, including average price, fuel mix, and environmental characteristics
associated with the supplier’s resource portfolio. In addition, the proposed
regulations state that the competitive supplier must also disclose whether it or any of
its affiliates has a purchase power contract with an existing public utility whose rates
are above the current market price and whether the contract must be renegotiated pursuant
to the recently enacted restructuring legislation.</font></p>
<p align="justify"><font face="Arial">On November 25, 1997, the Massachusetts legislature
enacted legislation to restructure the electric industry in Massachusetts. The
restructuring act established a comprehensive framework for the structuring of the
electric utility industry and directed the Department to promulgate rules and regulations
to implement the framework. On January 19, 1998, the Department issued its proposed
regulations. </font></p>
<p align="justify"><font face="Arial">The regulations provide that each distribution
company must provide standard offer and default service to its retail customers who are
not receiving energy from a competitive supplier. Standard offer service shall begin on
March 1, 1998 and continue for seven years. Customers who have not selected a competitive
supplier and customers who receive energy from competitive power suppliers but notify the
distribution company by July 1, 1998 that they wish to receive energy under the standard
offer, are eligible for this service. Under the standard offer service, customers will
initially receive a ten percent (10%) rate decrease from their average 1997 rates.
Starting September 1, 1999, the customer’s average rates under the standard offer
service will be reduced by fifteen percent (15%) from the average 1997 rates. The
regulations provide that customers who are not receiving energy from competitive suppliers
or through the standard offer service are eligible for the default service. The rates for
the default service will be established through a competitive bidding process, but the
rates for this service cannot exceed the average monthly market price for energy as
determined by the Department. In procuring energy for both the default service and
standard offer service, the distribution company shall purchase energy through a
competitive bidding process subject to Department review. </font></p>
<p align="justify"><font face="Arial">The regulations provide that all competitive
suppliers must obtain a license from the Department prior to engaging in retail
transactions. The license process requires that the supplier disclose whether it or any of
its affiliates have power purchase agreements with existing public utilities whose rates
are above the current market price and whether such contracts must be renegotiated. The
restructuring act requires the utility and the seller to renegotiate the contract in good
faith.</font></p>
<p align="justify"><font face="Arial">The regulations require that each person that will
provide energy to retail customers, whether as a competitive supplier or the distribution
company through the standard offer or default service, must prepare an information sheet
containing price, fuel mix, environmental emissions, and union-labor information
associated with the resources used to provide the energy. Regarding the price information,
the regulations require that the average energy price must be provided for specific levels
of use. For example, the regulations state that the average price for residential
consumers must be shown using levels of 250, 500, 1000 and 2000 kWh per month and that for
commercial customers, the average price must be broken down showing 1000, 10,000, 20,000
and 40,000 kWh per month. In addition, the regulations state that if the average price for
energy is based on the spot market or other variable prices, the price must indicate what
the price would have been in the last month of the prior quarter.</font></p>
<p align="justify"><font face="Arial">The regulations require the persons serving retail
load must also disclose the fuel mix, emissions, and labor characteristics from specific
generating facilities, and if applicable, from system energy. Regarding fuel mix, the
regulations provide that the supplier must identify specific fuels used and each
fuel’s percentage in the supplier’s overall resource portfolio. In addition, the
regulations state that the supplier must identify certain emission characteristics
including carbon dioxide, nitrogen oxides and sulfur dioxides for its resource portfolio.
The regulations also state that the supplier must disclose whether a majority of the
employees operating the generating plants are union employees and whether replacement
workers were used at the facility during the prior calendar year. </font></p>
<p align="justify"><font face="Arial">Comments on the regulations were filed on January
30, 1998 and it is anticipated that the Department will issue final regulations in the
near future.</font></p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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