DPU Cuts Proposed Rate Increase for Milford Water Customers
Return on equity reduced to lowest of any water utility in the Commonwealth
BOSTON – Friday, August 30, 2013 - The Massachusetts Department of Public Utilities (DPU) today ordered a 35 percent reduction in the Milford Water Company’s (MWC) requested rate increase. MWC sought to recover costs associated with a recently built water treatment facility that will ensure Milford residents a safe and clean water supply.
MWC, which serves 8,800 customers, requested a $3,817,870 - or 82.7 percent - increase in its water revenues. After a prudency review of MWC’s expenses, the DPU disallowed $1,340,888 in cost recovery, allowing only $2,476,982 to be recovered. When the new rates go into effect, a typical household bill will increase by $48.60 per quarter.
The DPU's decision follows a ten-month investigation that included a public hearing in Milford and five days of evidentiary hearings.
“The Commission carefully reviews any rate increase before it is passed onto the customer, in this case the Milford Water Company needed to make upgrades to its system in order to keep providing clean water to customers,” said DPU Chair, Ann Berwick, “We kept that increase to a minimum and further reduced the rate increase due to concerns we have about the management of the company.”
The DPU found a number of shortcomings in MWC’s management and therefore reduced the Company’s allowed return on equity (ROE) to 9.2 percent, the lowest ROE that the DPU has granted for a water utility in over thirty years. MWC had requested an ROE of 11.5 percent. In a partial dissent, one Commissioner recommended that, in addition to reduction of the ROE, some construction costs that the Company paid to an affiliated entity should not be passed on to ratepayers.
The Order, signed by all three commissioners, emphasizes that MWC has significant work ahead to improve its relationship with the residents and community it serves. These improvements include maintaining high-quality, safe drinking water, better communication with the community, and a more open procurement process.