Massachusetts AG Healey Challenges $96M Retail Rate Increase Request from Eversource

Vowing to fight against unjustified utility profits at the expense of customers, on January 17, Massachusetts Attorney General Maura Healey announced her opposition to Eversource electric company’s request to increase its customers’ retail rates by $96 million.

Eversource filed a rate request (Docket No. 17-05)  with state  Department of Public Utilities on January 17  that would boost charges to its eastern Massachusetts customers by 7 percent and hit western Massachusetts with a roughly 10 percent increase in their monthly bills, according to a report by the State House News Service..

According to the utility, the proposed rates would add about $8.45 to the monthly bill of an eastern Massachusetts customer served by subsidiary NSTAR , in order “to alleviate a revenue deficiency of roughly $60 million.”

In western Massachusetts, Eversource stated,  proposed rates would add roughly $11.64 to the monthly bill of a customer served by subsidiary Western Massachusetts Electric – thereby addressing a revenue deficiency of $35.7 million in that service area.

Eversource has 1.4 million electricity customers in 140 Bay State communities and 300,000 natural gas customers in 51 communities.

AG Healey is pushing back on these plans, noting that Eversource continues to ask for more money from its customers than does the other regulated state utility, National Grid.

“Over five-years (2010-2015),” she stated, “Eversource’s shareholders of common stock received a cumulative total return (including quarterly dividends and the change in the market price per share) of 89 percent. Yet, NSTAR and WMECo ratepayers continue to pay higher distribution rates than similarly situated National Grid customers.

As a regulated public utility, Eversource is required to justify why the state should permit it to raise electric rates on residents and business customers,” said AG Healey. “Our initial evaluation shows that Eversource should be returning profits to customers as savings, not raising rates. We urge the DPU to reject Eversource’s request for a rate hike.”

Indeed, business advocates have voiced their concern about the substantial rate hike.

Because Massachusetts’ small business owners are increasingly concerned that the high cost of energy is affecting their ability to compete here, we will be closely monitoring the proceedings before the Department of Public Utilities and thank Attorney General Healey for her advocacy on behalf of small businesses,” Bill Vernon, Massachusetts State Director of the National Federation of Independent Business (NFIB).

So, too, are consumer advocates. “NCLC will be intervening in this important rate case to ensure that the interests of low income ratepayers are protected,” said Charlie Harak, senior attorney for Energy and Utilities Issues at the National Consumer Law Center. “Among other things, we will be looking closely at the requested return on equity.”

Last month, AG Healey sent a letter to the DPU, calling on the agency to launch an investigation to explain why the allowed profits for Massachusetts utility companies are higher than the allowed profits in neighboring states.

This letter followed a decision by the DPU in October allowing a 9.9 percent shareholder profit – called, return on equity or “ROE” – as part of National Grid’s $101 million rate hike. This was the highest allowed ROE for an electric or gas utility company in Massachusetts since 2009.

Recent decisions in Connecticut and Maine limited electric companies’ ROE to 9.1 and 9.0 percent, respectively. Small changes in a company’s ROE can either cost or save customers millions of dollars. If National Grid’s ROE had been limited to 9.1 percent, the rate allowed in Connecticut, National Grid customers would save approximately $12 million per year, the AG said.

The DPU sets a utility company’s ROE as one element of a company’s costs in a rate case. In making its ROE decision, the DPU considers evidence presented by the AG’s Office and company expert witnesses. Eversource’s request includes a 10.5 percent ROE, which, if granted, Healey said, would be the highest ROE granted by the DPU since at least 2009.

By statute, the AG’s Office of Ratepayer Advocacy represents the interest of ratepayers in proceedings before the DPU. The AG’s Office will be actively advocating for customers throughout the rate cases for NSTAR and WME Healey stated.

If approved, the new rates would go into effect on January 1, 2018.

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