Eversource offers late holiday gift: No rate hike in January
PITTSFIELD — Eversource wants to do something unusual, near the close of a contentious rate-setting case.
It is proposing it not charge Western Massachusetts customers an extra million dollars in January — if not even more.
That's the essence of a Dec. 8 filing to the Department of Public Utilities. The utility provides electricity to residential, municipal and commercial customers in large parts of the Berkshires.
In one sense, it would be a gift that kept giving. Eversource is already voluntarily forgoing the higher rates it could be charging this month, under state law, following the DPU's Nov. 30 decision in the 10-month rate case.
That result was a mixed bag for Eversource, since the regulatory department cut 30 percent from the $34.7 million the company wanted to tack on to customer bills in Western Massachusetts starting Jan. 1.
For reasons the company feels are too complicated to explain to customers, Eversource would rather skip the first month's rate increase and start charging more as of Feb. 1. January bills would continue to reflect rates as of 2017, before the increase granted by the DPU, but with one difference.
As of Jan. 1, the utility has permission for six months to pass along higher electricity costs from its suppliers. Eversource distributes electricity but does not generate it.
That means bills as of January will be higher, but the full impact of both the seasonal increase and the higher distribution rate would not be felt until February.
Meantime, the Attorney General's Office is asking the DPU for more time — until Jan. 19 — to appeal over Nov. 30 decision.
Though the state agency dialed back on Eversource's rate request, Attorney General Maura Healey opposed any increase, calling instead for a rate reduction.
Healey said the DPU's decision "chooses unjustified corporate profits over Eversource's 1.4 million customers."
Mark D. Marini, the DPU's secretary, has notified parties they have until Friday to comment on the attorney general's request for more time.
The advent of new rates is complicated by the fact that the state is still reviewing a second aspect of the Eversource case. The department is not scheduled to decide the "rate design" aspect of the issue until Dec. 29.
Rate design refers to how Eversource will apply the allowed cost increases to its service area. That includes both the Western Massachusetts Electric Co. territory in the Berkshires and Central Massachusetts and the NSTAR Electric Co. region to the east.
The DPU cuts from what Eversource wanted were deeper for NSTAR. That division's requested $56.1 million rate increase was cut by $43.8 million — or about 78 percent.
Taken together, the company says the need to prepare compliance documents for both the rate increase and the matter still not resolved creates a kind of perfect storm of paperwork.
It's worth a million bucks, the company's argument suggests, to let it all play out through January.
Priscilla M. Ress, an Eversource spokeswoman, said the delay is forced by the complexity of the rate overhaul it expects will result from the rate design ruling still pending.
"We're voluntarily forgoing a month of increased revenue so we won't be collecting the increase retroactively in February," she said.
In its filing, Eversource also offers what might be seen as another kind of holiday season gift, this one to the DPU itself. Rather than push to resolve the rate design case by Dec. 29, the utility proposes the ruling come by Jan. 5.
The attorney general's most recent filing also offers a little holiday season love to regulators, saying it would be more efficient and practical to handle the appeal after deciding the rate design side of the case.
The company has its own financial motive for delaying the rate hike, its 16-page filing makes clear.
If it used an accepted practice of "holding" customer bills for a month, it would have to incur long-term debt, since it doesn't have enough cash on hand to manage through January without normal customer payments.
If it did not produce bills for January reflecting new rates, it would not receive payments worth $180 million.
"The Company is willing to forgo the allowed rate increase for one month to avoid the detrimental impacts for the company, its customers and other interested stakeholders," the filing explains.
On top of that, it would be tough to explain the situation in customers.
"It will be difficult for the Company to communicate the reason for the delay in a way that is logical to the average customer," the company says.
Holding on to the January billing cycle and charging customers twice in February could trip up households on automatic payment plans, Eversource tells the DPU, "causing confusion and overdrafts."
In Western Massachusetts, the billing issue affects 130,019 residential customers and 16,782 commercial and industrial customers.
While Eversource did not make public the amount of money it proposes to leave on the table in January, a rough sense can be computed.
The rate increase approved for 2018 is $7.66 a month for the average residential customer. That's defined as one using 543 kilowatt hours of electricity per month.
Multiplying the increase in the average residential bill by the number of affected customers in that category comes to $995,945. Add to that another large sum that would be paid by commercial accounts.
That amount of revenue the company proposes to ignore comes on top of a similar amount that it is not collecting for December.
Also last week, Eversource met a DPU requirement that it explain how the newly allowed rates will affect customers.
For the average residential customer, the $7.66 increase represents a 6.7 percent rise, taking monthly bills from $113.51 to $121.17.
The original Eversource request called for increases of 9 percent for residential customers.
The rates for 2019 in that category are scheduled to drop 3.1 percent, falling from $121.17 to $117.42.
The last rate increase granted for the WMECO region came in 2011.
The November decision bars Eversource from seeking another distribution rate increase until 2022.
Larry Parnass can be reached at email@example.com, at @larryparnass on Twitter and 413-496-6214.
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