Mass. AG announces rate agreement with merging utilities
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Wednesday that a settlement with NSTAR and Northeast Utilities will save customers approximately $217 million through a distribution rate freeze and rate credits.
The agreement was a condition for Coakley's office to approve the merger between Northeast Utilities and NSTAR. The proposed agreement can now go to the Department of Public Utilities for consideration and possible final approval. Coakley's negotiations will provide savings to customers of NSTAR Electric, NSTAR Gas and Western Massachusetts Electric Company.
"The merger of these public utility companies has the potential to lower costs for customers through increased operating efficiency, but we believed ratepayers needed to see the results of those savings in their bills," Coakley said. "Through this agreement, customers across the commonwealth are ensured much needed savings through the distribution rate freeze and customer credits."
In September, Coakley's office recommended that the DPU require the two utilities companies to agree to multiple merger conditions. The settlement requires that the two companies institute a four-year distribution rate freeze, an immediate $21 million merger savings credit to customers, protection against inappropriate merger costs such as execution retention payments and golden parachutes, the application of specific accounting treatment to certain assets and merger related expenses, in addition to the submission of post-merger cost reporting and the restructuring of existing WMECo service territory rates that currently result in industrial and commercial customers paying much more than the actual costs to service them.
Connecticut Attorney General George Jepsen released a statement Thursday on the Massachusetts agreement and its relationship to Connecticut customers served by the two utilities.
"We will carefully review the Massachusetts agreement, but that agreement has little bearing on whether the proposed merger is in the public interest in Connecticut," Jepsen said. "NU and NSTAR still must prove that Connecticut customers will be better off as a result of the merger. Connecticut ratepayers must receive tangible benefits, including up-front rate credits and a reasonable sharing of merger savings achieved over time, as well as commitments concerning service reliability, storm response, jobs and energy efficiency."
Connecticut's Public Utilities Regulatory Authority anticipates a final decision about the merger by April 2.
In September, Coakley's office filed a brief arguing that the DPU should require distribution rate freezes for the utility companies or require them to direct $314 million in estimated 10 year savings back to customers in the form of credits if significant rate increases were filed in the next few years.
The Department of Energy Resources is also a signatory to Coakley's settlement agreement. It filed a separate agreement with the utilities requiring NSTAR to execute a 15 year power contract with the Cape Wind Project as another condition of the merger.