Customers of National Grid in Massachusetts who are looking to save money on their electric bills can do so by simply shopping for a lower rate. Competitive electricity companies exist in Massachusetts who are offering fixed electricity prices that are substantially lower than the price that National Grid is charging their customers. The majority of consumers living in Massachusetts remain unaware of their ability to shop for competitive prices and service even though the state’s energy choice laws clearly allow consumers to choose their electricity supplier.
The energy choice laws have opened up the generation portion of the power process for competition, as opposed to being a regulated monopoly by local utilities companies. For example, prior to Massachusetts electricity choice, National Grid would either generate or buy power generated from other sources, and then deliver that power to their customers through the power lines and wires. Electricity choice allows other electricity companies to sell generated power to customers. However, that power still needs to delivered to the customer’s home through National Grid’s lines and wires. National Grid continues to service their customers – even if they decide to purchase their power from an alternative supplier – by delivering the power, maintaining the reliability of the local power grid, responding to power emergencies, and by sending the monthly electric bill.
National Grid’s new role in the competitive market is often a source of confusion for customers thinking about shopping for electricity rates for the first time. Customers should understand that National Grid is still a regulated utility company whose revenues are generated from power distribution charges that are approved by the Massachusetts Department of Public Utilities. As a result of their revenues coming from regulated charges, they do not care if their customers choose to purchase their power from an alternative supplier. Customer’s who decide not to shop for competitive power rates simply pay a default rate for electricity generation through National Grid, however National Grid does not prosper from the default rate charges. The default rate is determined through an auction process by National Grid for alternative electricity suppliers. The alternative electricity suppliers submit bids for the right to service a percentage of the default paying customer base.
The two biggest reasons people do not bother to shop for competitive rates in central Massachusetts is their loyalty to National Grid and the fear of receiving a lower quality of power. As noted above National Grid is indifferent to whether or not their customers shop the competitive market for more attractive electricity prices. Energy choice laws in the state has shifted National Grid’s business to be only focused on the delivery of power to customers in their service area. Since power can only be delivered to a specific home in one way – through National Grid power lines – the quality of power does not change based on who the customer decides to purchase electricity. While a customer can make a decision to purchase their electricity from renewable sources such as wind power, the actual power that comes to their home will be the same quality no matter the source. Ultimately, electricity choice in Massachusetts gives customers the ability to save money on the National Grid electric bill by finding a competitive plan to replace the utility default rate.