Attorney General: Why Can MA Utility Companies Profit More Than Other States?

MASSACHUSETTS — The attorney general is asking why utility company profits are allowed to go up in Massachusetts more than in neighboring states. AG 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.

There are 19,077 National Grid customers in Marlborough.

In a letter sent to the DPU Monday, Healey urged the DPU to shine more light on – and improve the process used to determine – utility companies’ allowed profits, said an announcement.

In her letter, 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, she said in the statement, 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, she argued.

“Massachusetts customers should not be paying millions more towards utility profits than customers in neighboring states,” said Healey in a statement. “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.”

According to the announcement, 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, she explained in a press release. 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.

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

Patch file photo