DOER pitches default time-of-use rates as transmission costs and smart-meter rollout loom

Mike Jovino, an energy data analyst at the Massachusetts Department of Energy Resources, told municipal energy managers on July 1 that the state should move to default time-of-use (TOU) rates to better align customer behavior with system peaks and to slow billion-dollar transmission investments.

Jovino said ISO New England projects $7 billion to $9 billion in new transmission upgrades under expected peak demand growth if municipalities and customers do not shift load away from system peaks. "If we're not managing that load ... it's going to be billions and billions and billions more in costs for the system," he said, warning those costs are socialized across New England and ultimately charged to ratepayers.

To reduce peak-driven investments, DOER recommended a default TOU structure developed through the Interagency Rates Working Group and the Electric Rates Task Force. "Our conclusion ... was we want default time-of-use rates for all customers in Massachusetts," Jovino said, adding that customers would be able to opt out and that rollout must include robust customer protections.

Jovino tied the TOU recommendation to the state's investment in advanced metering infrastructure (AMI). He said Massachusetts has deployed more than 250,000 AMI meters and has spent about $2 billion on AMI systems that enable granular time-based pricing. "Why would we spend that $2 billion if we're not going to use it to offer more cost-reflective rates?" he asked.

He argued TOU rates can both lower individual customers' bills (by exposing avoidable high-hour consumption) and reduce system-level wholesale and capacity costs if many customers shift load. Jovino cautioned that TOU must be paired with protections and predictable off-peak pricing so residential customers are not unfairly penalized.

Jovino also outlined the underlying price drivers: natural gas often sets the marginal wholesale price in New England and energy market dynamics (day-ahead and real-time markets, capacity payments, ancillary services) feed into the supply portion of customer bills. He noted policy costs — including energy-efficiency programs and renewable incentives — make up roughly 20% of a typical Massachusetts bill.

DOER officials are recommending a phased TOU rollout tied to AMI deployment, customer protections and opt-out mechanisms, and continued attention to equity through tiered low-income discounts. Jovino said slides and DOER materials would be shared with attendees for further review.

The presentation concluded with an invitation to questions; Jovino said he would follow up on specific technical and programmatic questions during the Q&A portion.