Healey: DPU should look into utility profits

Attorney General Maura Healey urged the Department of Utilities to investigate the profits of electric and gas companies in Massachusetts.

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By State House News Service

The Department of Utilities should investigate the profits of electric and gas companies in Massachusetts, focusing especially on the rates of return on equity permitted in rate cases, according to Attorney General Maura Healey.

In a letter to the DPU dated Monday, Assistant AG Rebecca Tepper said a comprehensive, open investigation would ensure that the best regulatory practices are being used when setting allowable rates of return on equity. Return on investment allowances have a "significant monetary impact" for ratepayers and shareholders, Tepper wrote.

The average allowed return in rate cases for distribution companies nationally fell from 10 percent to 9.4 percent between 2010 and 2016, Tepper wrote in her letter, but the allowed rates of return for Massachusetts electric and gas companies "are trending up, not down."

The DPU allowed a 9.9 percent return on investment in a recent National Grid case, Tepper said, after the company's witness recommended 10 percent to 10.5 percent and the attorney general's office witness recommended 8.5 percent.

The 9.9 percent allowed by the DPU was "the highest rate of return on equity for an electric or gas utility in Massachusetts since 2009" and included $7.5 million in added consumer and business costs compared to a 9.4 percent return, which would have been the average between an 8.5 percent and 10.25 percent return.

“The Department of Public Utilities is reviewing the letter received from Attorney General Healey and will continue to uphold their mission to ensure that utility consumers are provided with the most reliable service at the lowest possible cost while protecting ratepayers’ rights," Executive Office of Energy and Environmental Affairs spokeswoman Katie Gronendyke said in response to Healey's request. The executive office oversees the DPU.