National Grid Massachusetts customers on the variable basic service rate have seen huge volatility in the price that they pay for electricity over the last year. After recent news of National Grid releasing their variable rate over the next six months, it is apparent that the volatility will continue. Consumers on the variable basic service rate can avoid the price uncertainty, as well as reduce their electricity bills, by shopping for lower competitive electricity rates offered by alternative Massachusetts electricity suppliers.

Through State energy choice laws, Massachusetts has opened up their electricity market to allow competitive energy companies to offer service to residential and business customers. The law allows customers who receive their electric bill from one of the three major utilities in the state – NSTAR, National Grid, and Western Mass Electric – to shop for a lower electricity price that would replace their utility default rate for electricity generation supply. The default rate is charged to all customers who decided not to purchase power from a competitive supplier.

Customers on the default rate pay a charge known as the basic service rate for electricity supply which includes the generation and transmission components of the electric bill. Default rate payers have a choice between paying a fixed basic service rate and a variable basic service rate. The fixed rate remains the same for six month periods, while the variable rate changes every month. However, even though the variable rate changes on a monthly basis, customers know what that variable rate will be for the next several months. Both rates are determined through an auction process that National Grid holds for alternative suppliers for the right to service basic service rate customers. The outcome of the auction process is largely dependent on the condition of the wholesale energy markets during the time of the auction.

Both rate structures have been extremely volatile over the last several years, with recent rates being the higher end of the spectrum. The high default rates have allowed for competitive electricity suppliers to offer rates that are well below the basic service offers, presenting an opportunity to for customers to lower their National Grid electric bills. Since 2012, the variable basic service rate has ranged from a low of 6.544 cents per KWh in September of 2012 to a high of over 20 cents per KWh in January of 2015. In November, the variable rate will increase by 26.4% from the October rate. Customer who remain on the variable basic service rate are going to see their total electric bills increase by about 20% as their supply rate goes up from 8.8 to 11.27 cents. The variable rate will continue to rise over the next several months going to 13.38 cents in December and then over 15 cents in both January and February of next year.

The volatility in the rates and increasing electric bill amounts can be stopped by simply shopping for a lower competitive electricity rate. In order to avoid further price uncertainty consumers should find a competitive offer that is fixed and not a floating month to month price. Finding a fixed electric rate will eliminate the uncertainty of volatility in the energy markets that leads to negative surprises on the electric bill amount. Furthermore, if the fixed rate is lower than the variable basic service rate on a monthly basis, consumers will also save money through a lower electric bill.

Many energy consumers in Massachusetts are unaware of a massive price hike that is getting ready to go into effect that will greatly increase the size of their monthly electricity bills. Residential customers of National Grid will experience a rate hike of 40% for their power supply. The rate hike will effect all residential customers who are on the basic service rate, which includes all consumers who have not switched to a competitive electricity supplier.

As an energy choice state, Massachusetts consumers have the ability to shop for lower electricity rates offered by licensed competitive energy suppliers. The competitive suppliers offer rates for the generation component of the electricity. Utilities such as National Grid continue to act as the regulated power delivery company. Customers who haven’t shopped and purchased competitive power pay the basic service rate offered by National Grid. The basic service rate is a default rate for electricity generation supply and is determined by an auction process effected by wholesale power prices. After the completion of the auction process, basic service rates stay in tack for six month periods. On November 1, 2015 a new period will begin causing the price to rise substantially for those consumers who are still on the default basic service rate structure.

Currently National Grid residential customers in Massachusetts are paying $0.09257 per KWh for their power supply. That price will increase to $0.13038 on November 1, 2015 which equates to a 40% price increase that will be seen on National Grid electric bills starting in late November. Residential customers in the National Grid service area have enjoyed the lower $0.09257 rate since May of this year. The 40% increase is going to surprise many consumers who do not keep up with energy market trends. While some consumers have complained that Massachusetts energy choice is bad because it adds another product on the list to shop for, those who have taken advantage have been able to reduce their electric bills month after month. It is important to understand that the purpose of basic service rate is to act as a default price for those consumers who are unwilling to take the necessary time and shop for better pricing options.

Customers who are willing to shop for lower Massachusetts electricity rates will be pleasantly surprised. There are many electricity suppliers who are competing with each other for new National Grid customers, offering rates that will save basic service paying customers substantial amounts on their electric bills. In order to sell electricity in Massachusetts a supplier must be licensed by the Department of Public Utilities, which minimizes the risk of consumers receiving unworthy offers. All electricity rate offers listed below are a direct comparison versus the National Grid basic service rate. Customers can avoid the November 2015 rate hike by enrolling in a competitive rate plan.