AG Healey to Challenge $96 Million Rate Increase Request from Eversource
Rate Hikes Proposed for NSTAR Electric ($60 million) and the Western Massachusetts Electric Company ($36 million); Includes Shareholder Profits of 10.5 percent
BOSTON – Vowing to fight against unjustified utility profits at the expense of customers, Attorney General Maura Healey today announced her opposition to Eversource electric company’s request to increase its customers’ rates by $96 million.
Today, Eversource filed a request with the Massachusetts Department of Public Utilities (DPU) to raise the price that customers pay to have their electricity delivered by NSTAR Electric Company (NSTAR) and Western Massachusetts Electric Company (WMECo). Eversource is seeking 10.5 percent shareholder profits, while increasing WMECo customers’ rates by $36 million and NSTAR customers’ rates by $60 million.
Over five-years (2010-2015), 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.”
“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).
“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.”
“The Energy Consortium believes the Eversource return on equity is excessive considering the low risk of financial exposure,” said Roger Bourghesani, chairman of The Energy Consortium, Inc., a nonprofit association of industrial, commercial industrial and governmental large energy users.
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 was limited to 9.1 percent, the rate allowed in Connecticut, National Grid customers would save approximately $12 million per year.
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 today includes a 10.5 percent ROE, which, if granted, 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 WMECo.
AG Healey’s Energy and Telecommunications Division works to ensure Massachusetts businesses and residents have access to reliable, safe and affordable energy. This matter was handled by Division Chief Rebecca Tepper, with the assistance of all of AG Healey’s Energy and Telecommunications Division.