Nov. 3--Regulatory history was made in Massachusetts yesterday.

The Department of Public Utilities formally approved a controversial new pricing system for Bay State Gas, in a move designed to encourage the utility to push for more energy conservation. The so-called "decoupling" rate plan is the first time that the system has been used in Massachusetts.

The idea is to move utilities away from making more money by selling more natural gas or electricity. Under the new system, utilities get rewarded for how much they push down energy use.

The plan, aggressively backed by Gov. Deval Patrick's administration, will be applied to all other utilities -- with National Grid up next to have its decoupling plan approved later this month.

Environmentalists back the decoupling system. "This forces utilities to become more interested in seeing (energy) efficiencies," said Ian Bowles, Patrick's secretary of energy and environmental affairs.

Business groups remain skeptical about the idea, saying it's turning market forces on their heads.

"We're not convinced it's going to lead to lower (utility) prices," said Bob Rio, a vice president at the Associated Industries of Massachusetts.

The DPU's also approved a $6 monthly rate increase for Bay State Gas customers. The hike is 45 percent smaller than what the company had been seeking.

jfitz@bostonherald.com

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