Our Opinion: Eversource rate increase would be bad for business
Eversource Energy will go before the Department of Public Utilities Monday with a rate hike request that Jonathan Butler, the president and CEO of 1Berkshire, warns that for Berkshire businesses could "take away growth potential for decades." We don't see that as hyperbole.
Eversource is seeking to raise $95 million in the rate hike, which would constitute an increase of about 10 percent over current rates beginning on January 1 of next year. That translates to a hike of $11.64 per monthly bill for the average customer in Western Massachusetts, according to the office of Attorney General Maura Healey. That is a hard hit for homeowners, but the impact on businesses that use large amounts of electricity it is potentially devastating. Mr. Butler was joined at an Eagle editorial board meeting last week by Patricia Begrowicz, the president of Onyx Specialty Papers in Lee — which along with Crane & Co. and Berkshire Health Systems comprise the three largest Berkshire users of electricity — and Peter C. Stasiowski, the director of communications for Interprint in Pittsfield, to discuss that impact.
For a business based in Lee, the prospect of a rate hike inevitably recalls the decision of Schweitzer-Mauduit International's decision to close four paper mills in Lee and Lenox Dale in 2007. There were a number of economic factors, but a critical one was an increase of $770,000 on that year's electricity bill issued by what was then the Western Mass. Electric Company. Ms. Begrowicz emphasized that the existence of Onyx is not threatened but the hike, if approved, "is absolutely going to affect growth." Mr. Stasiowski made the same point, and if Onyx, Interprint and other Berkshire businesses must curtail hiring and the purchasing of equipment to compensate for a larger electric bill, a struggling Berkshire economy will struggle even more.
Ms. Begrowicz told The Eagle that Onyx's $775,000 electricity bill for 2016 would increase incrementally to $1.2 million in 2019 if the rate hike was approved. In an interview with The Eagle, Pittsfield Schools Superintendent Jason McCandless said the impact on the city's 12 public schools would be "massive," adding to the woes of a department that is facing the prospect of teacher layoffs.
The disparity between the impact on the eastern and western regions of the state is also of concern. Eversource says it will raise $60 million in rate revenue from the east and $35 million from the west, which seems fair on the surface, but that $60 million would come from 1.2 million customers in the heavily populated east while only 215,000 customers — businesses, residents, municipal buildings and so on — which share the $35 million burden for the west. That translates to a $166 increase per customer in the west and $50 per customer increase in the east. The Berkshires shouldn't be subsidizing eastern electricity rates while it carries its only high burden.
Eversource says it is seeking to address a revenue deficiency of $35.7 million in the western end of the state and adds that it has been investing in better technology and other improvements. The company can certainly make a case for a rate hike increase, just not one that Mr. Stasiowski described as "insulting" because of the adverse impact on businesses of such a hike. Ms. Begrowitz also pointed out to The Eagle that her company is already hit with three rate increases a year by Eversource.
For traditional businesses, it appears too easy for Eversource to simply go to state regulators and request a rate hike without finding ways to cut its costs — which businesses like Onyx and Interprint will have to do if hit by the rate hike. Businesses that are unhappy with Eversource rate hikes also have no option of going to another source of electricity.
Eversource is asking DPU for permission to get a 10.5 percent increase in return on equity, compared to the 9.3 percent that was the average return on equity for utilities around the country in 2016. While 9.3 percent should be the absolute ceiling, its impact on Berkshire businesses would be only marginally less than the 10.5 percent increase, and that is without factoring in the unfair imbalance between east and west.
"When so many customers today are struggling to make ends meet and businesses are trying to lower their energy costs to maintain and grow jobs, it is time to return money to customers, not to raise their electric bills," Attorney General Healey testified at a state Department of Public Utilities hearing in Springfield late last month. Ms. Healey will testify at Monday's hearing, which will be held at 6 p.m. at the Berkshire Athenaeum. We urge the DPU to deny Eversource's rate hike request. Eversource has not made an adequate case for it the businesses, municipalities and residents that will be punished by it.
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