The Department of Public Utilities received testimony from dozens of people at Tuesday's hearing at Berkshire Community College. It was the second local hearing the state has held on the proposal this year.
PITTSFIELD, Mass. — State Sen. Adam Hinds knows the Berkshires has problems and he sought office in order to help "right the ship." But, he says Eversource's proposed rate increase threatens the county's economic stability.
"We struggle with the impact of population decline every single day. We have schools that are closing now because of the lack of student enrollment. We have towns fighting about budgets and the tax burden continues to shift to the people who are staying. The median household income is in most towns $20,000 more below the rest of the state," the Pittsfield Democrat told a panel from the Department of Public Utilities on Tuesday night during a hearing regarding Eversource's increases.
"And yet, as we try to right the ship, we don't even have the basic infrastructure to get us back on our feet. We have too many towns that are experiencing a lack of high-speed internet. Our transportation does not allow for us to connect with regional economic centers. We also have difficulty for a lot of employees to travel to a high paying job. And now, we are confronted with a rate increase to electric rates that we already know have caused companies to leave Massachusetts or putting a ceiling on the expansion of companies."
Eversource is seeking some $96 million more in revenue from ratepayers of both NStar and Western Mass Electric Co, the two utility companies falling underneath its umbrella. The company claims the rate hike will offset an operating deficiency and allow for some $400 million in capital investment over time. It originally filed the request in January and immediately faced outrage from the public and from elected officials.
Attorney General Maura Healey has been vocally opposed to the rate increase. Assistant Attorney General Elizabeth Mahoney said her office has not only come to a determination that the request should be rejected, but that rates overall should decrease.
"The attorney general's office has been working hard over the past several months to investigate the company's proposal and talk to experts about the best path forward for Eversource's customers. We've concluded that Eversource's $96 million rate increase request is unfounded and not in the best interest of ratepayers," Mahoney said on Tuesday.
"In June we participated in a month of evidentiary hearings during which we cross examined the company's witnesses. Two weeks ago we filed a brief urging the department to deny the company's request for a rate increase and instead decrease rates."
One particular concern from those who spoke out at hearings held across the state in the spring was that the changes significantly hurt Western Massachusetts more than the eastern part of the state. The company, in response, revised its rate structure to create a more even playing field.
Ed Davis, director of rates for Eversource, said that change is particularly seen in commercial and industrial customers. He said there had been some customers out east who would have seen a decrease in rates. So, a revised plan, which was filed in June, calls to split the increase Western Mass would have seen and shift more of the burden on those eastern companies.
"In our original filing, some of our commercial and industrial customers in eastern Mass were getting reductions. This is because rates for these customers were set 20 to 30 years ago and the methodologies for updating costs and designing rates have changed since then," Davis said.
"However, commercial and industrial customers in Western Mass were getting increases. These customers would have had these increases even as a stand-alone company with no affiliation with NStar electric. The question raised at the hearings was why can't this be better balanced between east and west? So we worked to achieve what we believe is a more balanced proposal."
The largest customers in Western Massachusetts would see an original 8.7 percent rate increase drop down to 4.4 percent.
The company maintains the request for $96 million and the change was an effort Eversource made "to set new rates that provide fair balance among all customer groups," Davis said. He said the operating deficit still needs to be overcome.
"We developed the alternative rate design based on customer feedback received during public hearings in March and April. I'd like to point out that Eversource is not changing its overall rate request. We filed this request back in January because we are operating with a revenue deficiency. This means costs we are incurring to serve customers are greater than the revenue we are collecting through rates," Davis said.
"The main reason for this deficiency is money we've already spend on capital projects such as upgrades to local electric grid, directly benefiting customers in Western Mass."
Resident Girard Cote said the alteration of the plan is a "divide and conquer" strategy. He says the east versus west attitude is forcing a conversation about which side benefits more, pushing the outright rejection of the rate increase to the back burner. Cote said it has been clear where the community stands on the issue and he hopes the DPU will follow through on its mission to set rates that provide the best service at the lowest cost.
"We all know which side we are on, our question for the DPU is what side are you on?" Cote said.
State Rep. William "Smitty" Pignatelli remembers the last time such a rate increase was made and he doesn't want to see it happen again. The Lenox Democrat said two mills closed almost immediately when new rates went into effect in 2007 and both cited, in part, high electricity costs. That left close to 400 people out of work.
"It is still sizable and cuts into local businesses' already narrow margins," Pignatelli said.
Christopher Matthews, co-owner of Onyx Specialty Papers, said companies like his pay the fourth highest rate for industrial electricity in the country. Should the rate go down in its total sense, the company would still see a 35 percent total increase in transmission and distribution charges.
"The cost of electricity is one of our largest expenses in our budget," Matthews said.
The proposal breaks down customers into different rate categories and Eversource provided a breakdown of the expected changes in bills. For the largest customers, the anticipated bill increase is expected at about $12,850. For low-income residents, who receive a discount, the cost rising by $3.74, or 3.5 percent. The more average user would see a $10.87 increase or 10.1 percent.
Davis said there isn't much room to change the pricing when it comes to residential bills to smooth it over across the state, while Pignatelli says the Berkshires' ability to pay is significantly less than others.
"The four known facts about the Berkshires are: we're smaller, we're older, we're sicker, and we're poorer," Pignatelli said.
But who is not poorer, according to state Rep. Tricia Farley-Bouvier, is Eversource's senior staff members. The proposal does not eliminate a shareholder guaranteed return of 10.5 percent, she said, while in a single day the company's CEO takes home in salary as much as the annual median household income in the Berkshires.
"The company, its shareholders, they are getting along just fine, just fine without putting additional burdens on we, the residents, the businesses, and the municipalities, of Berkshire County. I can tell you, we are not getting along just fine," the Pittsfield representative said.
She called the salaries "outlandish" and rejected the idea that shareholders should be guaranteed 10.5 percent return from a public utility.
"The overall increase is far too much for ratepayers. And Eversource, its executives, and its shareholders are protected far too much with this proposal," Farley-Bouvier said. "Eversource is asking for an additional $96 million increase, which reflects a 10.5 percent return on equity. Eversource has already proven itself to be a very profitable company as reflected by the executive's outlandish salaries and bonuses."
Residents, businesses, and elected officials have consistently opposed the increase in rates.
Those in the audience also rejected the company's push for a "performance-based" rate making process, which could set increases in the future without a new rate case. Farley-Bouvier called that a "scheme" that was convoluted and represents close to $47 million more in revenue over time.
Mayor Linda Tyer called the increase "obscenely greedy" and lamented on how it will impact the city of Pittsfield. She said the city will be seeing a $736,119 increase in bills for streetlights and municipal buildings. That, in turn, will have to be paid by the taxpayers, so residents will "be hit up twice." She said she'd rather invest that money into education, public safety, or improving the roads.
"Municipal governments should not be ignored," Tyer said.
Thomas Wickham, a selectman in Lee, couldn't agree more. His town is still trying to recover from those paper mills closing. He, too, rejected the 10.5 percent return on equity saying that is "about 5 percent more than necessary."
"We are struggling. We need growth," Wickham said. "I'm concerned we won't e able to recover from this one and it will just go on and on."
The Rev. Patricia Loughlin told a hypothetical story of a teenager doing homework one night when the lights go off. That student then goes to school embarrassed.
"They're going to go home with the fear that it could happen again, it would happen again, for no fault of their own they will suffer," she said.
And that's not how people should be treating each other, she said. She said the community needs to look out for each other and focus on helping the most vulnerable out. This rate increase does not do that, she said.
"Our brothers and sisters are standing with us and their children are our children," Loughlin said.
And the threat of shutoffs is real. Janet Viselli told the DPU that there were some 10,000 disconnects last year. She said there are a lot of workers in the area who don't make enough to afford all of their bills.
"There is just not enough money to go around. We have to choose whether we eat or not. Whether we pay the rent or not," Viselli said. "The situation is bad enough already and it will get worse if this rate hike goes through."
The final decision on the rate structure is expected to be made by the end of the year.
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