Friday, December 23, 2016

AG Healey Calls on the DPU to Investigate Increase in Allowed Profits for Utilities in Massachusetts

AG Healey Calls on the DPU to Investigate Increase in Allowed Profits for Utilities in Massachusetts

Seeks More Transparency in the Department of Public Utilities’ Decision-Making Process; A Decrease in Shareholder Profits Would Save Customers Millions

BOSTON – Attorney General Maura Healey this week called on the Department of Public Utilities (DPU) to launch an investigation to explain why the allowed profits for Massachusetts utility companies are going up and are higher than the allowed utility profits in neighboring states. In a letter sent to the DPU Monday, AG Healey urged the DPU to shine more light on--and improve the process used to determine--utility companies’ allowed profits.

In her letter links to PDF file, AG Healey describes the DPU’s final decision-making process for a company’s allowed shareholder profits – known as its rate of return on common equity (ROE) – as less transparent than other public utility commissions.  The DPU does not provide a road map or the specifics for how it arrives at a final allowed ROE number, and the final result often appears inconsistent with the DPU’s other findings.  Small changes in a company’s ROE can either cost or save customers millions of dollars.

“Massachusetts customers should not be paying millions more towards utility profits than customers in neighboring states,” said AG Healey. “As the ratepayer advocate for the state, we must ensure best practices and a transparent process that is understandable to the public. Our office is calling on the DPU to conduct a comprehensive and public review of utilities’ allowed profits and to bring more clarity and openness to the rate-setting process.”


AG Healey’s letter follows a decision last week by the Connecticut Public Regulatory Authority to limit the allowed ROE to 9.10 percent for the United Illuminating Company. In October, the DPU allowed a much higher 9.9 percent ROE as part of National Grid’s recent $101 million rate hike, which is the highest ROE for an electric or gas utility company in Massachusetts since 2009.  If National Grid’s ROE was limited to 9.10, the rate allowed in Connecticut, its customers would save approximately $12 million per year.  In the most recent Massachusetts rate cases for Unitil and Eversource Gas, the DPU allowed each company a 9.8 percent ROE, similarly costing customers millions of dollars.

The DPU sets a utility company’s ROE as one element of a company’s costs in a rate case. In making its ROE decision, the DPU considers evidence presented by the AG’s Office and company expert witnesses.

In her letter, AG Healey asks the DPU to explore a range of options for increasing transparency for the public, recommending that the DPU review its current practices, the practices of other states’ public utility commissions, and opportunities for improvement.   

Eversource Electric recently announced that NSTAR Electric and Western Massachusetts Electric Company will be asking the DPU to approve rate increases in January 2017.   

AG Healey’s Energy and Telecommunications Division works to ensure Massachusetts businesses and residents have access to reliable, safe and affordable energy. This matter was handled by Division Chief Rebecca Tepper, with the assistance of all of AG Healey’s Energy and Telecommunications Division.

1 comment:

  1. So what's up with the major rebate for the overcharges on the nuke plant costs for retirements?
    When will your commissioners decide what to do with the 500,000.00 they will be getting.
    Or should i say we will be getting!
    The town could use a influx of cash in the capitalization account to upgrade the highway fleet and other things needed for some time. The fact is with the cutting out of any pilot for the town to use it has and will continue to be harder and harder to find any extra for the capital needs.
    So will the TMLWP start to be part of the town help or continue to hurt our future needs.
    Soon with the new truck inspections the state may require,we will need to face the reality and do some capital investments.
    So will the TMLWP spend our money overcharged in the past on the NEW building for them or the NEW battery park they say they need! QUESTIONABLE at best. Is the Battery park another scam for the MMWEC to saturate us with unneeded expenses so they will have a better operation for wind power storage.As with other projects we lost out funds on this also without a grant like others nearby recieved it makes no monetary sense to invest so much without the clear cost and replacement needs of batteries for years to come. Will we need to hire another worker and further expand the budget forever to maintain the corrosive mountain of batteries it will require. Would we need to purchase the batteries from the MMWEC company like we do for the LED street lamps.
    From 400.00 each to now 259. such a deal.
    Did the lamps go out to bid or are the rules different for the gifted TMLWP commissioners.
    Keep an eye on your bills there may be some changes on the way.
    Demand they give back what they overcharged us over the years and don't let them spend it on a operation free from any competition.

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