Eversource requests electric rate hike that could shock Western Mass. customers
PITTSFIELD — Eversource customers could see their electric bills increase by about 10 percent next year under a request filed on Tuesday by the utility.
But state Attorney General Maura Healey has vowed to challenge the proposal by Eversource, which would raise customers' rates by nearly $36 million, as well as a $60 million increase by NSTAR.
The increase, which would affect Eversource's residential, commercial and industrial customers, will be considered by the state Department of Public Utilities. A decision is not expected until the end of this year. If approved, the increase would not go into effect until Jan. 1, 2018.
"As a regulated public utility, Eversource is required to justify why the state should permit it to raise electric rates on residents and business customers," Healey said in a statement. "Our initial evaluation shows that Eversource should be returning profits to customers as savings, not raising rates. We urge the DPU to reject Eversource's request for a rate hike."
Eversource has 1.4 million electricity customers in 140 Massachusetts communities and 300,000 natural gas customers in 51 municipalities, including most of the Berkshires.
The utility is asking state regulators to allow it to increase its base distribution rate to address a revenue deficiency of $35.7 million in the utility's Western Massachusetts service area. The typical residential customer would see an increase of about $11.64 on their monthly bill.
Eversource is seeking 10.5 percent shareholder profits through its rate increase, according to the Attorney General's Office. Between 2010 and 2015, Eversource's shareholders of common stock received a cumulative total return of 89 percent, the AG's office states. Yet, NSTAR and Eversource ratepayers have continued to pay higher distribution rates than similarly situated National Grid customers, Healey said. NSTAR and Northeast Utilities, Eversource's parent company, merged in 2012.
In Massachusetts, the basic distribution rate refers to the costs utilities incur by delivering electricity to customers via local power transmission lines, and includes metering, billing and other customer services. It differs from the basic supply rate, which changed on Jan. 1, and is legally required to change every six months. Under the basic supply rate, Eversource purchases electricity from wholesale suppliers on behalf of its customers and passes the cost directly to them.
By law, the basic distribution rate is required to change every five years, according to Eversource spokeswoman Priscilla Ress.
In a company statement, Eversource said the change in the distribution rate is being requested in order for the company to expand its commitment to reliability and clean energy technologies, and is part of a "longer term plan" intended to deliver the benefits of a "modernized grid" to its customers.
"Over the past five years the business has grown and technology has grown to keep the system reliable," Ress said. "We've been working to modernize the electrical systems and also investing in advanced technology solutions protect the integrity of the grid."
The company's distribution rates have remained stable over the last 10 years due to efficient cost management while electric reliability has improved, the utility said.
Jonathan Butler, the president and chief operating officer of 1Berkshire, the county's leading economic development agency, said he had been briefed by Eversource on the rate increase.
"Anytime this happens it's a little bit of a cause for concern because energy costs are a major, major concern throughout the Berkshires," he said. "Competitiveness is critical."
Bill Vernon, Massachusetts State Director of the National Federation of Independent Business, said the NFIB intends to "closely monitor" the proceedings before the DPU.
Charlie Harak, senior attorney for energy and utilities at the National Consumer Law Center, said that organization will be involved in the case.
"NCLC will be intervening in this important rate case to ensure that the interests of low income rate payers are protected," said Harak, who spoke at a forum in Pittsfield last year. "Among other things we will be looking closely at is the request return on equity."
In a statement, Eversource said the request is part of a long-term term plan to deliver the benefits of a "modernized grid" — one that would better meet increasing customer expectations and align with clean energy policy goals. The change is required by law and locks in annual operating costs of $30 million resulting from the merger between NSTAR and Northeast Utilities. Northeast Utilities became Eversource Energy in February 2015.
Company officials said the planned rates incorporate costs associated with capital investments geared toward improving service reliability, and are based on "actual operation and maintenance cost deficiencies for a test year ending June 30, 2016."
"Customers are experiencing fewer and shorter outages as a result of our smart investments in sophisticated technology," said Craig Hallstrom, president of Massachusetts Electric Operations at Eversource, in a statement. "We've also worked hard to improve reliability for customers with efforts like our enhanced tree trimming programs, all while holding the line on rising costs. Now, we're proposing to increase that commitment and utilize the latest engineering advances — including electric vehicle infrastructure and energy storage systems for the benefit of customers."
Information from the State House News Service was included in this report.
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