Eversource seeks big distribution rate hike

EVERSOURCE ON TUESDAY SOUGHT regulatory approval for a hefty increase in its distribution rates, a move that has the potential to sharply increase monthly utility bills in its service areas in eastern and western Massachusetts.

Utility bills have four major components: customer service, distribution, transmission, and power supply charges. This rate filing only applies to distribution, which is the cost of delivering electricity to customer homes.

The utility said it is seeking to recover a $60 million deficiency in its eastern Massachusetts distribution rates and a $35.7 million shortfall in its western Massachusetts rates. The proposed rate hike would boost the per-kilowatt-hour distribution fee substantially, but Eversource officials said they are streamlining elements of the charge so it was difficult to calculate the exact percentage increase.

Eversource said the change in the distribution rate would boost the typical customer’s monthly bill by $8.45, or 7 percent, to $129.43 in eastern Massachusetts. In western Massachusetts, the company said a typical customer’s bill would rise $11.64, or 10 percent, to $126.52.

Attorney General Maura Healey said she would oppose the rate hike, and particularly the utility’s request for a 10.5 percent return on equity. She noted the other big Massachusetts utility, National Grid, received a 9.9 percent return on equity in its latest rate filing, which was significantly higher than the 9.1 percent awarded to the company in a rate case in Connecticut. “Our initial evaluation shows that Eversource should be returning profits to customers as savings, not raising rates,” Healey said in a statement. “We urge the DPU to reject Eversource’s request for a rate hike.”

Michael Durand, a spokesman for Eversource, said the company’s current return on equity is 10.5 percent in its eastern Massachusetts service territory and 9.6 percent in western Massachusetts. He said the company’s rate filing seeks a 10.5 return on equity in both service areas.

Eversource is also seeking approval to move ahead with a number of initiatives to improve the reliability of the power grid; expand the use of renewable energy, particularly solar; pilot energy storage projects; and roll out infrastructure for charging electric vehicles.  The total cost of what the company is calling its Grid-Wise Performance Plan is $400 million, including $45 million for the electric vehicle charging infrastructure, but a spokesman said it is unclear whether all of those programs would be launched and the costs incurred within the next five years. The cost of the Grid-Wise program, if approved, would be recouped in Eversource’s next rate case.

Kevin Conroy, cochair of Foley Hoag’s energy and clean tech practice, called Eversource’s rate request significant. “They’ve asked for the moon, knowing they won’t get everything they want from the Department of Public Utilities,” he said.

Conroy, whose firm represents a number of businesses that sell electricity directly to consumers, said he is concerned the Grid Wise program would prevent his clients from offering customers smart meters and other products in competition with Eversource. “Right now we can’t do it because Eversource won’t allow us to do it,” he said.

Durand said Eversource’s filing will be the company’s first fully litigated rate case in eastern Massachusetts in 25 years. Utilities are required by law to submit rate filings to the Department of Public Utilities every five years, but the review process was subsumed within DPU approvals for company mergers in 1999 and 2012 and avoided in 2005 through a rate settlement agreement with the attorney general’s office. Eversource said its distribution rates have remained stable for the last decade. If approved by the Department of Public Utilities, Eversource’s new distribution rates would take effect on Jan. 1, 2018.