Massachusetts restructured its electric industry in 1998. Under the plan, electricity customers were given the option to select a competitive electricity supplier (i.e., an alternative to their normal utility) or accept standard offer services. The standard offer service is the price to customers who did not choose a competitive power supplier. Standard offer customers—most customers opted for the standard offer—received a 10-percent rate reduction in 1998, which was increased to 15 percent in 1999.

• From 1990 through 1997, nominal electric retail prices—prices unadjusted for the effects of inflation—increased, going from 8.85 cents per kilowatthour (kWh) in 1990 to a high of 10.48 cents per kWh in 1997. Because of the rate reductions for customers selecting the standard offer noted above, retail prices decreased to 9.59 cents per kWh in 1998 and to 9.16 cents per kWh in 1999 (see graph).
  
  
• Real electricity prices—prices from which the effects of inflation are eliminated—were stable from 1990 through 1997, indicating that Massachusetts' nominal retail prices did not increase more than inflation during those years. Real prices dropped precipitously in 1998 and 1999 because of the rate reduction noted above (see graph).
  
  
• In 1999, residential customers in Massachusetts paid an average of 10.09 cents per kWh, which was substantially above the national average of 8.16 cents per kWh for all residential customers. Industrial customers paid an average of 7.75 cents per kWh, which was also substantially higher than the national average of 4.43 cents per kWh for industrial customers.
  
  
• Because of fuel cost increases, Massachusetts regulators have approved rate increases for customers participating under the standard offer. Through 2001, standard offer rates have increased 40 percent or more, depending on the utility. These rate increases will drive up the average retail electricity prices across the State.
  
  

Related Websites

• Energy Information Administration, Monthly Energy Review (Table 7.5):
  http://www.eia.doe.gov/mer/elect.html
• Energy Information Administration, Annual Energy Review (Table 8.13):
  http://www.eia.doe.gov/emeu/aer/electr.html
• Energy Information Administration, State Electricity Profiles: http://www.eia.doe.gov/cneaf/electricity/st_profiles/massachusetts.pdf
• Energy Information Administration, Electric Power Monthly (Tables 44-55): http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
• Energy Information Administration, U.S. Average Monthly Bills by Sector, Census Division, and State (Table 1): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales and Price for Power Marketers (Tables C1-C4): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales, and Price by State and Utility: http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html