AG Healey appeals Eversource rate decision

  • HEALEY Contributed photo

Recorder Staff
Thursday, December 21, 2017

Massachusetts Attorney General Maura Healey has appealed the Eversource rate decision by the Department of Public Utilities, saying the ruling fails to adequately explain or support allowing the company’s rate of return on equity.

It also called for reconsideration of the company’s rate case in light of the recently passed federal tax law, arguing that unless the DPU adjusts its decision to reflect Washington’s newly reduced corporate tax rate, “Eversource customers will be overpaying for their electric service by hundreds of millions of dollars” over the rate plan’s coming five years, representing “major corporate windfall,” in the words of the filing.

“The DPU’s order would increase costs for Massachusetts electricity customers by tens of millions of dollars,” Healey said in explaining the appeal, which was filed Wednesday. “We are appealing because customers deserve to know why the DPU chose to enrich Eversource shareholders at the expense of electric ratepayers.”

The AG’s filing specifically appeals DPU’s approval of a 10 percent shareholder return, which Healey’s office calls one of the highest rates allowed by an electric distribution company regulator in the last five years.

The petition alleges the DPU violated the state Administrative Procedures Act and legal precedent by failing to adequately explain or support its order increasing Eversource’s allowed shareholder profits.

Healey’s office asked the DPU to recalculate Eversource’s rates to reflect the coming reduction of the federal corporate tax from 35 to 21 percent under federal tax legislation passed this week.

“Under this tax bill, Eversource and other utility companies are getting a major tax break, paid for by the American people,” said Healey in a written statement. “We’re taking this action to ensure that the companies use these corporate savings to lower rates for Massachusetts customers instead of lining their own pockets.”

The AG’s office said it determined that the new federal law should result in a nearly 50 percent reduction in the $25 million rate hike for Eversource’s Western Massachusetts Electric Co. customers, to $13 million.

The DPU set the utility’s return on equity as part of its Nov. 30 rate case decision to increase Eversource rates by $220 million over the next five years, including a $37 million increase in the first year and additional annual increases of over 3.5 percent for the next four years.

Over the course of the rate case, Healey’s office argued that Eversource’s requested 10.5 percent rate of allowed shareholder profits should have been cut back to 8.875 percent, and called on the DPU to investigate why profits allowed for Massachusetts utilities are higher than the 9.1 percent allowed in Connecticut or 9.0 percent in Maine. It noted that the nationwide average in the shareholder profits allowed last year by public utility commissions was 9.3 percent .

The AG’s office also filed a motion for reconsideration that urged the DPU to reduce the allowed annual rate increases under Eversource’s five-year rate plan, as well as reconsider how it treats the accounting and recovery of certain vegetation management expenses, to save customers more than $40 million.

The DPU plans to rule by Dec. 29 on a proposed allocation in the rate increase, which the utility has said would result in a $7.75 dollar increase on the total bill for an average residential customer using 550 kilowatt hours.