Coakley files objection to rate hike

Keith Loria Feb. 16, 2011, 4:21am


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Wednesday that her office wants a proposed $6.2 million rate hike planned by the New England Gas Company to be rejected.

Coakley filed a brief to the Department of Public Utilities asking it to reject the hike that NEGC is seeking.

This is the third requested rate hike since 2007 made by the Houston-based Southern Union Company, of which the NEGC is a subsidiary division.

"Our office believes that many of the costs Southern Union is trying to pass off to Massachusetts ratepayers are unjustified," Coakley said. "We do not believe ratepayers should have to foot the bill for many of these unjustified costs, including the costs of environmental litigation by the company.

"We're also still waiting for the results of an audit from NEGC's last rate increase, and don't believe any increase should be approved until that audit is completed."

Coakley questions the validity of NEGC's accounting, alleging that in its last rate proposal in 2008 it had not provided all the necessary financial information for the audit to be conclusive.

The DPU ruled that an audit by an independent auditor was deficient and asked for a new one. On January 26, the DPU ruled that NEGC's revised contract was still not in compliance with the order. An audit is still pending.

Coakley also alleges that Southern Union has passed on approximately $30 million in costs associated with an environmental lawsuit against it to Massachusetts consumers. Nearly $18.5 million has been spent on legal fees paid to a law firm in which the company's chief operating officer has a financial interest, Coakley claims.

The litigation involves NEGC's environmental remediation of a site in Tiverton, R.I., where NEGC's predecessor allegedly dumped hazardous waste. Coakley alleges that Southern Union's failure to contain these costs shows the company's poor management of NEGC.

If the proposal is approved, a residential customer using about 110 therms per month will see their bill increase about $10.80 per month.

A decision about the request is expected on April 1.

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