AG Healey Files Brief in Eversource Rate Case, Urges DPU to Reject Company’s $284 Million Rate Hike, Order Rate Decrease
Company’s Proposal Seeks First-Year Rate Hike of $96 million for NSTAR Electric and Western Massachusetts Electric Company Customers
BOSTON – In a brief filed today, Attorney General Maura Healey urged the Department of Public Utilities (DPU) to reject Eversource’s proposal to increase the electricity rates of its 1.4 million Massachusetts customers by nearly 20 percent. Calling the proposed increase of $284 million over the next five years “unwarranted,” the AG Healey’s Office also called on the DPU to order the company to decrease its rates.
“As customers and businesses across our state are looking to trim their costs, now is not the time to burden them with a 20 percent bill hike to benefit a company that is already highly profitable,” AG Healey said. “Customers in Massachusetts deserve a decrease in rates, not hundreds of millions in extra charges.”
In a January 2017 filing, Eversource asked the DPU to raise the price that customers pay to have their electricity delivered by NSTAR Electric Company (NSTAR) and Western Massachusetts Electric Company (WMECo) by nearly 20 percent over the next five years. The company proposed a five-year rate plan that would raise customers’ rates by $284 million, a $96 million increase in the first year and then an additional $188 million more over the next four years.
In the brief, the AG’s Office challenged the need for the rate increase, noting NSTAR’s and WMECo’s stable cost structure, record stock price, and outsized investor returns over the last few years. According to the brief, in both 2015 and 2016, Eversource shareholders earned far more on their investments than others who made similar investments with similar risks. NSTAR’s reported returns for those years were 13.2 and 11.3 percent, respectively, and WMECo’s were 8.9 and 9.1, respectively. The AG’s Office also noted that Eversource has spent hundreds of millions on tangential investments, recently paying $800 million in cash for a water company and acquiring a 50 percent interest in an offshore wind partnership that could cost billions of dollars.
AG Healey and her office have been challenging 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. Her office echoed that sentiment in the brief and challenged the DPU to consider the appropriateness of Eversource’s request to earn a 10.5 percent rate of allowed shareholder profits – or return on equity (ROE).
If approved by the DPU, Eversource’s ROE would be the highest allowed return in New England, and significantly higher than the average ROE (9.3 percent) allowed by state public utility commissions throughout the country last year. A 10.5 percent ROE would be the highest ROE granted by the DPU in a decade. In its brief, the AG’s Office urged the DPU to reject the requested ROE and instead approve a reduction to 8.875 percent, which will save Eversource customers $42 million, almost half of the requested first-year rate increase.
The AG’s Office is also calling on the DPU to reject Eversource’s proposed multi-year rate plan, consisting of a series of automatic rate increases. The AG’s Office argues in its brief that “the [c]ompany's proposal creates an up-front guessing game that creates substantial risks for ratepayers that Eversource’s electric distribution companies will be over-compensated, with very little risk for [the company] that it will suffer low returns.”
While AG Healey and her office strongly support the state’s efforts to meet its statutory obligation to reduce greenhouse gas emissions and to invest in Massachusetts’ clean energy future, the office raises concerns about the company’s $400 million plan for grid modernization, electric vehicle, and storage investments. In its brief the AG’s Office told the DPU that the company’s plan “essentially amounts to a request for a blank check, lacking in critical details and providing no guarantee that ratepayers will benefit from the proposed investment.” Instead, AG Healey advocated for moving forward with statewide policies to advance these investments while ensuring that specific proposals benefit customers at the lowest possible cost.
Filing the brief is the latest action in AG Healey’s and her office’s months-long public opposition to the rate case, including cross-examining witnesses during the DPU’s four weeks of evidentiary hearings on the case and testifying at the ten public hearings the DPU held on the case.
In March, AG Healey herself testified before the DPU in Boston and then again in April in Pittsfield urging it to reset the balance between company profits and customers’ rates. She told the DPU, “it is time to return money to customers, not to raise their electric bills to benefit highly profitable utility companies.”