The measure, sponsored by Senate Majority Leader Williams V. Irons, D-East Providence, would give Narragansett Electric greater flexibility in purchasing power for customers who receive the so-called "last-resort" service.

They are those who left Narragansett Electric to buy power from a competitor, but later decided to return to the utility. New customers since 1998 are also put on last resort.

Last-resort prices have generally been higher than those charged to most other customers who receive the "standard offer."

That's partly because Narragansett Electric purchased long-term contracts for standard-offer customers, assuring a level of stability. The power it buys for last-resort customers is purchased much more frequently, making its price volatile.

There were about 1,050 commercial and industrial customers who received last-resort service as of last month.

Irons' bill would allow Narragansett Electric to buy long-term contracts for last-resort service, said Ken Payne, senior policy adviser to the Senate. That, in turn, should make last-resort prices more stable.

The bill would also allow more flexibility in buying power for standard-offer service as well, Payne said.

Another major change proposed in the bill would allow customers who are on the last-resort service to return to standard offer under certain conditions.

For that to happen, the Public Utilities Commission would have to determine that a competitive market for electricity doesn't exist. Residential customers would be allowed to return to standard-offer service as long as they committed to staying for a set period of time; industrial and commercial customers would be returned to something like standard offer, although they could be charged more.

Payne said the cost to the utility would be "minimal" to move these customers off last-resort service.

One of the key beneficiaries of such a bill could be entities like the League of Cities and Towns, Payne said.

That organization has entered into a five-year contract to buy electricity for the municipal use of 34 of Rhode Island's 39 cities and towns. When that contract expires in 2004, the League might have to go to last-resort service if it can't negotiate a new deal with another supplier.

On the House side, key legislators have been working on a more ambitious bill that would allow municipalities to buy electricity for residents and would create a pilot program of new rate options -- including time-of-use and "green power." The bill also addresses backup power rates, the amount a large industrial customer that generates its own electricity must pay to have the utility maintain a backup power connection.

That bill, which is sponsored by House Speaker John B. Harwood, D-Pawtucket, and Rep. Brian Kennedy, D-Hopkinton, is still being revised by the House Corporations Committee, which he chairs.

Kennedy is planning to meet with Irons this week to discuss the House and Senate bills, said John O'Toole, director of the Legislative Press Bureau.