AG Healey Urges DPU to Deny Eversource’s Proposed $300 Million Rate Increase
Company’s Proposal Seeks First-Year Rate Hike for NStar Electric Customers of More Than $60 Million and Western Massachusetts Electric Company Customers of More Than $36 Million
BOSTON – Advocating on behalf of the 1.4 million Eversource customers, Attorney General Maura Healey in testimony Thursday night urged the Department of Public Utilities (DPU) to reject the utility company’s request to increase its customers’ electric rates by more than $96 million next year and an additional $50 million annually for the next four years.
“[T]his [case] is an important opportunity for the Department to reset the balance between company profits and customer rates,” AG Healey told the DPU at the hearing. “When so many customers today are struggling to make ends meet and businesses are trying to lower their energy costs to maintain and grow jobs, it is time to return money to customers, not to raise their electric bills to benefit highly profitable utility companies.”
In a Jan. 17 filing, Eversource asked the DPU to approve a first-year rate increase of $60 million for NSTAR Electric (NSTAR) customers and $36 million for Western Massachusetts Electric Company (WMECO) customers. This would raise NStar customers’ bills in Boston by more than $100 the first year. WMECO customers in Western Massachusetts would see increases in the first year of more than $150. In addition to the initial $96 million rate increase, Eversource is seeking approval for $50 million in charges from 2019 through 2022. Eversource’s proposals also included a request for a 10.5 percent rate of shareholder profits—or return on equity (ROE)—a level of return that exceeds that of other regional utilities.
In her testimony , AG Healey challenged the need for Eversource’s rate increase, noting NSTAR’s and WMECo’s high returns over the last few years. Referencing NSTAR’s 2015 return of more than 13 percent, Attorney General Healey told the DPU that “[l]ast year, no state public utility commission in the country allowed a return that high.” Between 2010 and 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.
AG Healey and her office have been advocating against Eversource’s proposed rate increase since the company announced it in early January. Prior to the company filing its request, AG Healey sent the DPU a letter urging it to launch an investigation to explain why the allowed profits for Massachusetts utility companies are higher than the allowed profits in neighboring states. She echoed that sentiment in her testimony Thursday and challenged the DPU to consider the appropriateness of Eversource’s request to earn a 10.5 percent ROE.
Citing a recent Regulatory Research Associates report and 2016 rate decisions in Connecticut and Maine, AG Healey noted that Eversource’s request is well above the shareholder profits allowed last year by public utility commissions throughout the country (9.3 percent nationwide average in 2016) and in neighboring states (9.1 percent in Connecticut and 9.0 percent in Maine). Small changes in a company’s ROE can either cost or save customers millions of dollars. Every one percent reduction in Eversource’s requested ROE will save customers more than $28 million a 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 utility expert witnesses. If the DPU grants Eversource’s request of a 10.5 percent ROE, it would be the highest ROE granted by the Department in nearly a decade.
AG Healey also urged the DPU to review Eversource’s proposed multi-year rate plan, noting that her office’s preliminary analysis shows that the plan would increase customers’ rates by more than 4 percent every year until Eversource’s next rate case in 2022. These increases, estimated at approximately $50 million a year, would be in addition to the proposed $96 million rate increase.
By statute, the AG’s Office of Ratepayer Advocacy represents the interest of ratepayers in proceedings before the DPU.
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.
The hearing held today by the DPU is the second of the ten public hearings that the agency is conducting across the state to hear the public’s concerns about NSTAR’s and WMECo’s proposed increase in rates. AG Healey is urging Eversource customers and businesses to attend public hearings and voice their opinions about this proposed rate increase.
The other rate hearings are scheduled for:
- March 30, Cambridge at 6 PM
- April 3, Barnstable at 7 PM
- April 5, New Bedford at 7PM
- April 6, Plymouth at 7PM
- April 10, Pittsfield at 6 PM
- April 12, Springfield at 7 PM
- April 24, Martha’s Vineyard at 6 PM
- April 26, Greenfield at 7 PM