For Immediate Release - April 11, 2017

AG Healey Urges the DPU to Deny a Proposed $68 Million Increase for Ratepayers in Western Massachusetts

Testifies in Opposition to Western Massachusetts Electric Company’s 5-year Rate Hike

PITTSFIELD – Advocating on behalf of 200,000 ratepayers in Western Massachusetts, Attorney General Maura Healey testified tonight before the Department of Public Utilities (DPU), urging it to reject a request by Eversource to increase electric rates for customers of the Western Massachusetts Electric Company (WMECo) by $68 million over the next five years.

“My job in this case, as it is in all rate cases, is to represent WMECo customers and ensure that they are receiving safe and reliable electric service at the lowest possible cost,” AG Healey told the DPU at a hearing in Pittsfield. “When so many customers in Western Massachusetts 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 a highly profitable utility company.”

In a Jan. 17 filing, Eversource asked the DPU to approve a first-year rate increase of $60 million for NSTAR Electric customers and $36 million for WMECo customers, beginning next year. This would raise WMECo customers’ bills by more than $138 in the first year. After the initial $36 million rate increase next year, Eversource (WMECo’s parent company) is also seeking approval for approximately $32 million in additional charges for WMECo customers – $8 million annually – from 2019 through 2022. Eversource’s proposals also include 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 tonight, AG Healey challenged the need for the proposed rate increase, noting WMECo’s high returns over the last five years. Referencing a S&P Global report from March 2016 showing returns averaging over 10 percent from 2012 to 2016, AG Healey told the DPU that “this was a very high profit given today’s historically low interest rates.” 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. She told the DPU that this case represents an opportunity for the Department to ensure that WMECo is not over-earning at the expense of its customers.

AG Healey and her office have been advocating against the proposed rate increase since Eversource 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 Monday and challenged the DPU to consider the appropriateness of the company’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. For WMECo customers, every one percent reduction in the requested ROE will save them $4 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 the 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 WMECo’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 WMECo’s next rate case in 2022. These increases, estimated at approximately $8 million a year, would be in addition to the proposed $36 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 seventh of the 10 public hearings that the agency is conducting across the state to hear the public’s concerns about WMECo’s and NSTAR Electric Company’s $300 million in proposed rate increases over the next five years. AG Healey testified before the DPU at its second public hearing on the rate case in Boston on March 24. 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:

  • April 12, Springfield at 7 p.m.
  • April 24, Martha’s Vineyard at 6 p.m.
  • April 26, Greenfield at 7 p.m.