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Proposed Eversource rate hike unpopular with some residents, politicians

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Recorder Staff
Monday, April 17, 2017

An April 26 Greenfield public hearing on Eversource’s proposed $300 million rate is likely to raise many of the same issues brought out in hearings last week in Pittsfield and Springfield or submitted through written testimony.

In fact, some Franklin County residents have already raised their concerns in written testimony that the proposed 10 percent increase in rates for residential customers would be “exorbitant.”

Some area towns, including Leverett and Shelburne, have also offered testimony about the utility’s importance to the community, such as through its customer assistance programs.

The 7 p.m. state Department of Public Utilities hearing, planned for the Greenfield Middle School auditorium, will be the last of 10 held statewide.

At an April 10 hearing in Pittsfield, Attorney General Maura Healey said the company’s proposed 10.5 percent return on equity is nearly 1 percent higher than the average return on equity allowed by the nation’s regulators last year.

“When so many customers in western Massachusetts are struggling to make ends meet and businesses, in particular here in western Massachusetts, are trying to lower their energy costs to maintain and grow jobs … it’s time to return money to customers, not to raise their electric bills to benefit a highly profitable utility company,” Healey said.

The size of the proposed increase, costing western Massachusetts customers $36 million more next year and $8 million a year for the four years that follow, was also a concern of some, including state Sen. Adam Hinds, D-Pittsfield. He pointed to the difference between the proportion of the rate case in the former Western Massachusetts Electric Co. territory — estimated by Hampshire Council of Governments Executive Director Todd Ford at a recent Conway listening session as more than three times higher.

“The proposed rate increase will have a disproportionately higher impact on Eversource’s customers in the Western Region as compared to the Eastern Region, due to the separate rate structure the company has maintained between the two territories,” Hinds said. “Such a rate increase, if approved … has the potential to negatively affect the economic development of a region already struggling to catch up and keep pace with its eastern counterpart.”

Ford said the utility may justify its proposed increase per meter in the west on more power lines and other infrastructure to serve each customer over a more sparsely populated area. But, he said, the DPU should allow the same formula as it does for National Grid, which assesses its customers in its western zone — including the eastern and western parts of Franklin County — 15 percent higher costs to even out higher capacity charges that occur in its northeastern zone.

Commercial and industrial customers could see increases of up to 37 percent in western Massachusetts. Rates for businesses in the east would decrease. Eversource provides electricity for 17 central Franklin County communities.

Eversource spokesman Michael Durand says that utility seeks to consolidate the rate structure between its Western Massachusetts Electric Co. and NSTAR territories, which means that it is moving to flat rates per kilowatt hour of usage rather than stepped rates. Critics say those stepped rates encourage customers to conserve energy.

Eversource is also being asked to study the same use rates across both territories, said Durand.

Rep. Paul Mark, D-Peru, added, “It’s unfair that they’re proposing a much bigger increase for (Eversource customers in) western Massachusetts, instead of polling the entire state as one. “There’s talk now that Eversource is working with DPU to see what the rates would be if they pooled the entire state. I’m hopeful they follow through on that.”

He added, “As we talk about attracting, or even retaining jobs in this area, a 10 percent rate increase can mean a substantial amount of money for any local business. … At what point do costs that I think are unfairly burdensome on our area become too high for businesses like that to maintain?”

Edward P. Champagne, Turners Falls Paper manager of engineering, wrote to the DPU last week that “it is widely known that Massachusetts already has among the highest energy costs in the nation. This puts local industry at a competitive disadvantage when compared to manufacturers located in other areas of the country with lower costs.”

The proposed increase, which would raise electric distribution rates as much as 45 percent for the company, Champagne wrote, “is unreasonable for industry in the Commonwealth and for Turners Falls Paper in particular, is not easily absorbed or sustainable without impact to our employees and customers.”

In one of several pieces of written testimony to the DPU, Colrain resident David Greenberg called on regulators to “completely reject Eversource’s unwarranted proposal,” adding, “My February electricity bill was just shy of $150 and I have solar panels! I can’t imagine what other people are paying. This proposal can only be described as disproportionate, exorbitant and greedy. … Given that Eversource profits grew 83 percent between 2010 and 2015, and that the top six executives earn in excess of $20,000,000 per year including salary and perquisites, I hardly think we owe them another nickel.”

Solar charges

Beyond the proposed rates adding $11.64 per month to the average 550-kilowatt hour residential bill for residential customers in the west as of Jan. 1, advocates of renewable energy point to disincentives for energy-efficiency as well as installing photovoltaic on homes.

In addition to its existing fixed monthly customer charge and a per-kilowatt-hour charge for power used, Eversource is proposing a peak “demand charge” for solar customers, based on how much electricity they use in their highest 15-minute period in the month, according to the advocacy group Vote Solar, which says the change would have a “severe impact” on the growth of solar power in the state, as have similar charges in other states.

“The addition of a demand charge will both complicate the electric bills of solar customers, and also reduce the ability of customers to reduce their electric bill as a result of solar and energy efficiency,” the group says in a position paper. “Demand charges undermine the economic benefits of solar and energy efficiency because while net metering allows customers to run their meter backwards with solar, that only impacts the part of your bill based on the amount of energy … you use. By shifting more of your bill to fixed and demand charges, it lowers the amount of your bill you can easily control by going solar or saving energy.”

William Sillinger, a board member of Greenfield-based Pioneer Valley Photovoltaics cooperative, said the demand and other charges for solar would “put hurdles in the way of economic solar installation for a lot of people,” even as the automatic annual rate hikes that would be put in place by the Eversource case would “make it more desirable to put in solar systems to get off the rates.”

Eversource’s Durand said the new demand charge for PV users, similar to one already in place for all commercial and industrial customers, is intended to assure that net-metering customers pay their “fair share” for maintenance of the company’s distribution equipment needed for peak load, instead of having it “cross-subsidized” by other customers. Those PV customers also will pay a distribution rate that is half of the 5.6-cent per-kilowatt charge for non-solar residential customers.

Mark LeBel, a staff attorney with the Acadia Center — a nonprofit advocacy group intervening in the rate case — said the imposition of a demand charge based on a 15-minute peak would be “unfair, and really hard to manage” without “smart meters” to keep track of peak usage dramatically adding to costs.

Also, LeBel said, moving from existing rate structures that provide customers with incentives to reduce consumption in peak months or during peak hours would “be bad for energy efficiency and low-income customers who tend to use less electricity. For customers who use more, they’ll be paying less per kilowatt-hour, while people using less will see their bills rise because of the higher customer charge.”

Nancy Hazard, a renewable energy consultant in Greenfield, said for residential customers with solar arrays, “Nobody has a clue what kind of income that would turn into and what kind of penalties that would be for us. If they’re going to slap us with a demand charge, there’s nothing in place that lets us have any control over what our demand is.”

The organization Franklin County Continuing the Political Revolution last week announced its opposition to the rate case, saying, “Eversource made profits of almost $1 billion in 2016. The salaries of the 5 highest paid Eversource executives totaled over $21 million. Yet Eversource wants to raise the typical Western Massachusetts ratepayer’s bill by about 10 percent or $11.64 per month.”

Eversource’s proposed distribution rate adjustments are based on actual operation and maintenance cost deficiencies for a test year ending June 30, 2016.

A decision is expected by Dec. 31.

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