In early 2007, large commercial and industrial customers in Western Massachusetts Electric Company's (WMECo) service territory began noting concerns with the large increases in their electricity bills. During the summer and early fall of 2007, three paper mills closed in Western Massachusetts, citing the high cost of energy as a reason to close.

Following these events, WMECo issued a media advisory in November 2007 attributing an approximated $5 million increase in the Company's earnings during the first nine months of 2007 to a settlement that had been reached between former Attorney General Tom Reilly and the Company in October 2006 (the "Settlement"). In response, the Office of the Attorney General Martha Coakley undertook an extensive investigation and, in May 2008, issued "An Analysis of Western Massachusetts Electric Company: January 2007 Rate Increase and Compliance with the 2006 Settlement."

The Analysis considers: (i) whether the first nine months of WMECo's 2007 earnings conflict with the terms of the Settlement; (ii) whether increases imposed on large commercial and industrial customers in January of 2007 were appropriate and transparent; and (iii) whether the Company is meeting its transmission upgrade commitments made pursuant to the Settlement. The Analysis faults WMECo for its failure to warn customers about electricity rate increases that they received at the beginning of 2007. The report also notes that a "perfect storm" of events including significant transition and transmission rates increases led to industrial customers receiving on average 55 percent delivery (approximately 23 to 26 percent total bill) rate increases at the beginning of 2007.

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