Our Opinion: Eversource will share its tax cut windfall
Critics who slammed the Republican tax "reform" bill signed into law last month by President Trump as a giveaway to wealthy individuals and corporations weren't accounting for aggressive attorneys general like Massachusetts' Maura Healey. Thanks to the attorney general's office's timely intervention, an estimated total tax cut of $74 million to electricity provider Eversource will, rather than fatten stockholder dividends or directors' salaries, be funneled instead into reducing the rate hike that company had planned to levy on its Berkshire County customers (and others in its service area) next month (Eagle, January 3).
In a masterpiece of corporate image polishing, Eversource announced that it had decided to "voluntarily" pass its own tax savings along to its ratepayers. Corporate directors no doubt decided to put a gloss on the company's so-called benificence rather than face a lengthy battle with Ms. Healey's office to keep the windfall — an image-eroding confrontation that Eversource probably would have lost anyway. The amount of its original rate hike, granted by the state Department of Public Utilities and less than Eversource originally sought, was predicated upon having to pay the pre-reform tax rate, and the AG is correct in requesting that the DPU reopen the question of the already-settled rate increase.
Eversource has already benefited from an overly friendly state regulatory climate. Last November the DPU, for reasons as yet to be adequately explained to the AG, awarded Eversource a Return on Equity (the amount the company is allowed to earn for its shareholders) of 10 percent. Ms. Healey's office, in its role as watchdog for consumer interests, called this excessive and recommended an 8.875 percent return. In a parallel undertaking to the tax/rate reduction issue, the AG will ask the state's Supreme Judicial Court to vacate the DPU's decision.
Circumstances on the ground, especially in economically-challenged Berkshire County, demand that the pending rate increase be trimmed while still allowing Eversource to enjoy a reasonable profit. For local job providers, the electric bill comprises an element of overhead that cannot be stretched, put off or avoided. Companies faced with an increase must make ends meet by trimming jobs or forgoing the hiring of new workers should business expand.
In this vein, Eversource's abstruse formula for hitting Western Mass. customers harder than their eastern counterparts is especially damaging to an already vulnerable region of the state. Aside from imperiling the solvency of businesses, big utility rate hikes are a double whammy for taxpayers since schools and public buildings also use electricity that must somehow be paid for.
Eversource's sprint to get to the head of a parade that had already departed is its own business. The electrical distribution company may keep its hand on the circuit breakers, but average ratepayers have their own advocate and champion in the attorney general, and should not and will not be forced to pay charges that are unjustified.
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