State DPU trims Eversource rate request by 30 percent
The state Department of Public Utilities, in a 814-page decision Thursday, trimmed 30 percent from the $34.7 million Eversource wanted tacked on to customer bills in Western Massachusetts.
Still, the increase will come on top of a seasonal adjustment linked to higher wintertime natural gas costs, delivering a double-whammy for customers.
Actual customer rates have not been calculated, an Eversource spokeswoman said Friday, and will depend on the outcome of a matter still before the department. The company serves about 1.4 million customers in 139 cities and towns; it has about 209,000 customers in Western Massachusetts.
The department's order rejected arguments from the Attorney General's Office to reduce rates, rather than allow an increase of any size.
Attorney General Maura Healey said in a statement the DPU's order "chooses unjustified corporate profits over Eversource's 1.4 million customers."
Angela M. O'Connor, chairwoman of the state agency, hailed the decision as a win for customers.
"By significantly reducing the rate increases proposed by Eversource, the Order ... will ensure safe and reliable electric service for ratepayers across the Commonwealth, while minimizing financial impacts on customers," she said in a statement.
One leader of a coalition of large electricity users in the Berkshires agrees with the DPU chairwoman that the decision offers relief from what could have been.
"I think this is a victory for ratepayers," said Patricia Begrowicz, president and co-owner of Onyx Specialty Papers in Lee.
Begrowicz said her company faced a $300,000 increase in rates in 2018 until Eversource revised its DPU filing, in response to widespread complaints about prospective cost increases for big commercial customers.
While she said she's pleased the DPU order cut $10.6 million from the amount Eversource wanted to raise in Western Massachusetts, Begrowicz is waiting to know precisely how much more her company — and other large Berkshire employers — will pay in 2018.
"The next thing is the detailed rates. It is still early," she said.
She cautioned that any increase in distribution rates makes it harder for her company to compete.
A Boston lawyer who handles rate cases told The Eagle that while the DPU pushed back on Eversource's request, the $24.1 million it will be able to add to its Western Massachusetts rates could hit hard.
"That is a significant increase," said Kevin C. Conroy, a partner with the Boston firm Foley Hoag. "Spreading that $24 million increase over 200,000 ratepayers is going to be painful."
Conroy worked previously as deputy attorney general under Martha Coakley, who is now also a Foley Hoag partner. His clients include people with cases before the DPU.
He said he was not surprised by the size of the department's reduction in the rate request.
"This is a common tactic by utilities," Conroy said of the size of the request. "They ask for the moon knowing that the Department of Public Utilities is going to cut it significantly."
Priscilla Ress, a spokeswoman for Eversource, told The Eagle the company will respond to a DPU request that it file revised estimates by next week on how customer bills will be affected by the lower rate increases allowed.
"Obviously we are disappointed with the deep cuts the DPU made to our rate request," Ress said.
She said the company believed it documented the need for a $91 million increase.
Meanwhile, another portion of the Eversource bill is poised to increase Jan. 1 as well.
While the issue before the DPU for 10 months this year concerned distribution costs, the utility had also filed for seasonal increases, based on higher costs of natural gas used to generate electricity during winter.
The DPU earlier approved that request, which will increase costs by a few cents per kilowatt hour in bills from Jan. 1 through June 30.
Eversource's residential customers will pay about $6 more a month due to the seasonal change. For an average customer using 550 kilowatt-hours of electricity, the bill will rise to about $121.
But those figures do not factor in the impact of the new distribution rate increase — which will not be made public until later this month.
Since energy deregulation, utilities have been allowed to pass through higher generation costs to consumers. Eversource distributes power but does not generate it.
Deeper to east
The DPU cuts in Thursday's order were deeper for the utility's NSTAR Electric Co., which serves Eastern Massachusetts. That division's requested $56.1 million rate increase was cut by $43.8 million — or about 78 percent.
But some of that reduction may be still be realized by customers of the former Western Massachusetts Electric Co.
That's because the DPU is considering Eversource's request for a "rate design order" that would allow the company to alter how it apportions rate increases throughout its Massachusetts service area. That decision is due Dec. 31.
Conroy, the Boston attorney, said it remains uncertain whether Eversource's NSTAR territory will pick up some of the burden of the Western Massachusetts rate increase.
Begrowicz, the president of the Lee paper company, said she was dismayed that the DPU, as part of its order, approved a new mechanism called Performance Based Ratemaking.
The department says the system will help the utility pay to upgrade its aging infrastructure without catching ratepayers by surprise.
According to an analysis that Begrowicz shaped, the system will bring annual cost increases in the range of 3 to 4 percent on some aspects of utility bills over the next five years.
While Begrowicz said she was against the introduction of the new mechanism, the DPU made what she called "substantial" changes to the proposal that will benefit ratepayers.
Meantime, actual rates will be calculated over the next four weeks.
"We'll be informing people as quickly as we can," Ress said of the distribution rate increase. "We just don't know the numbers. This is a very in-depth order that we're dealing with here. We're still reviewing it."
The decision bars Eversource from seeking another distribution rate increase until 2022.
In a wish to enhance green-energy options, the DPU's order approved a plan for Eversource to invest $45 million to speed up installation of systems that allow electric vehicles to recharge.
Distribution rates had not been increased for Eversource customers in Western Massachusetts since 2010.
Larry Parnass can be reached at email@example.com, at @larryparnass on Twitter and 413-496-6214.
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