Coakley looks for consumer protection from proposed National Grid rate hike

Keith Loria Sep. 30, 2009, 2:53pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley has requested that the Department of Public Utilities significantly modify a rate plan filed by National Grid.

Coakley filed a brief on Monday focusing on issues related to National Grid's decoupling proposal and rate plan specifically. In the coming weeks, the Attorney General's Office will file an additional brief making a final recommendation regarding the company's request for a $111 million rate increase.

As part of a $111 million rate request, National Grid proposed the Commonwealth's first "decoupling" mechanism for an electric utility designed to break the link between volumetric sales and revenues.

"While decoupling may remove disincentives to full engagement in energy efficiency measures, it also shifts substantial financial risks from shareholders to the backs of ratepayers," Coakley said.

"We fully support increased energy efficiency efforts and a balanced decoupled rate structure that includes a warranted downward adjustment in the company's return on investment as well as some limits on the recovery of revenue short falls due to factors other than conservation efforts such as the weather or the economy."

The Democrat has also asked state regulators to reject a variety of proposed cost trackers/automatic adjustment mechanisms that will make the company less efficient, less conscious of controlling costs, and, when combined with decoupling, virtually a risk-free enterprise for the company's shareholders despite a requested return on investment of 11.6 percent, she said.

While supporting the DPU's decoupling initiative, Coakley recommended several consumer protection adjustments to the company's decoupling proposal, including a downward adjustment to the company's return on investment recognizing the decrease in operating risk occasioned with decoupling and including restrictions to allow decoupling revenue recovery only for amounts in excess of historic declines in use per customer.

Coakley also requested that the DPU reject or modify a majority of the up to 20 cost-tracking mechanisms the company has proposed, including cost-tracking mechanisms for capital investments, uncollectibles, inflation and changes in the company's pension liability.

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