AG Healey speaks out against Eversource rate hike


For the Gazette
Published: 1/24/2017 9:35:29 PM

Massachusetts Attorney General Maura Healey has announced her opposition to the $96 million rate hike sought by Eversource, saying it represents a “fight against unjustified utility profits at the expense of customers.”

Her statement comes following the company’s Jan. 17 filing with the state Department of Public Utilities for a rate hike totaling $36 million in western Massachusetts to achieve 10.5 percent in shareholder profits.

Eversource has 15,000 electricity customers in Franklin County as part of its former Western Massachusetts Electric Co. territory.

Eversource shareholders received a cumulative return of 89 percent over the 25 years through 2015, Healey said, yet its ratepayers in western Massachusetts and NStar territories continue paying higher distribution rates than similar 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,” Healey said. “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.”

Small business owners in the state are increasingly concerned about high energy costs affecting their ability to compete here. National Federation of Independent Business State Director Bill Vernon said the organization plans to closely monitor the DPU proceedings.

The National Consumer Law Center also plans to intervene in the case “to ensure that the interests of low-income ratepayers are protected,” said Charlie Harak, its senior attorney for energy and utilities issues. “Among other things, we will be looking closely at the requested return on equity.”

The Energy Consortium, a nonprofit association of industrial, commercial, industrial and governmental energy users also believes the Eversource return on equity is excessive “considering the low risk of financial exposure,” said its chairman, Roger Bourghesani, in a press statement from Healey’s office.

In a letter last month to the DPU, Healey called for the agency to launch an investigation into why the allowed profits for Massachusetts utility companies are higher than those in neighboring states. The letter followed an October DPU decision allowing a 9.9 percent shareholder profit as part of National Grid’s $101 million rate hike.

The highest allowed shareholder profit for an electric or gas utility company in Massachusetts since 2009, it exceeded recent decisions in Connecticut and Maine limiting profits to 9.1 and 9.0 percent, respectively, Healey noted.

“Massachusetts customers should not be paying millions more toward utility profits than customers in neighboring states,” the letter said. “As the ratepayer advocate for the state, we must ensure best practices and a transparent process that is understandable to the public. Our office is calling on the DPU to conduct a comprehensive and public review of utilities’ allowed profits and to bring more clarity and openness to the rate-setting process.”

Small changes in a company’s so-called “return on equity” can cost or save customers millions of dollars, she noted.

According to the company, proposed rates in western Massachusetts would add roughly $11.64 to the monthly bill of a typical customer using 550 kilowatt hours of electricity, addressing a revenue deficiency of $35.7 million in that service area.

Company officials said the planned rates incorporate costs associated with capital investments geared toward improving service reliability, and are based on “actual operation and maintenance cost deficiencies for a test year ending June 30, 2016.”

If approved, the new rates would take effect Jan. 1, 2018.

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