Decision on Eversource rate hike drawing criticism

Even as Eversource prepares a response to the Department of Utilities call for a rate design that would take effect Jan. 1, pending a ruling at the end of the month, the DPU decision last week allowing the utility $220 million in hikes over five years is drawing criticism from the attorney general and others.

The DPU called for about a 30 percent reduction in the $34.7 million increase that had been sought for the company’s Western Massachusetts Electric Co. customers, part of an overall $43.8 million reduction in Eversource’s overall requested increase for its NSTAR and WMECO territories.

Eversource spokeswoman Priscilla Ress said, “We’re disappointed with the deep cuts the DPU made to our rate request because we feel we provided sufficient and detailed documentation to support the total increase we requested.” However, Attorney General Maura Healey expressed disappointment that the reduction didn’t go far enough.

“At a time when businesses and residents are already struggling with high energy costs, the DPU’s order chooses unjustified corporate profits over Eversource’s 1.4 million customers,” Healey’s office said in a written statement. “The department has allowed Eversource to raise rates by hundreds of millions of dollars, instead of imposing the decrease that customers deserve.”

Having argued that the company’s 10.5 percent rate of allowed shareholder profits should have been reduced to 8.875 percent, Healey’s office said, “Disappointingly, the increase includes a 10 percent shareholder return, one of the highest in the country. As the state’s ratepayer advocate, we will continue to fight on behalf of electric customers across Massachusetts.”

The attorney general’s office, which had called on the DPU to investigate why profits allowed for Massachusetts utilities are higher than the 9.1 percent allowed in Connecticut and 9.0 percent in Maine, noted that Eversource’s request is above the 9.3 percent nationwide average in the shareholder profits allowed last year by public utility commissions.

Healey argued in June that the company’s proposed change in how it planned to allocate its rate increase among customers merited a full review. As a result, the DPU split off the “rate design” part of the case — including whether to allow increases in monthly fixed charges and creation of a new “monthly minimum reliability charge” for new net-metering solar customers.

The utility plans to submit this week estimated bill impacts based on the ruling, and the DPU will rule at the end of the month on how Eversource’s overall $37 million increase in the first year should be allocated across all its 1.4 million customers. The DPU also allowed annual rate increases of 3.5 percent per year over the following four years

The Boston-based Acadia Center, a nonprofit research organization promoting clean energy, which was another intervenor in the rate case, criticized last week’s decision, including the size of the allowed increase. The center particularly took exception to an automatic 3.5 percent annual increases “for not doing anything” to earn it, in the words of Senior Attorney Amy Boyd.

“There’s no performance required of the utility,” she said, explaining that Acadia had called for some kind of performance metrics. “They just get more money.” Allowing a 10 percent return on equity for traditional infrastructure such as poles, wires and substations, Boyd said, works to the disadvantage of “non-wire” investments, such as distributed energy upgrades, energy efficiency, or demand-response alternatives that could meet system needs without a lot of expensive build-out but aren’t as big a money maker for the utility.

Boyd, who worked extensively on the case, called it “the correct decision” by DPU to call for grid modernization details to be separated back out of the rate case into a separate case, originally filed by Eversource in August 2015.

Although the size of a rate hikes won’t be known until the end of the month, Eversource customers can expect to see a 16 percent increase in electricity supply prices for the first six months of 2018. The pass-through energy charge, applied to customers who are signed up for the company’s Basic Service supply rate will total 10.641 cents per kilowatt-hour, slightly more than a penny and a half more than last winter’s rate of 9.126 cents.

That amounts to about $6 a month for a typical residential 550-kilowatt customer.

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