Mass. A.G. asks for utility rate increase be turned into a decrease‏

Nick Rees Oct. 15, 2009, 3:59pm

Martha Coakley (D)

BOSTON (Legal Newsline) - The Massachusetts attorney general has asked the Department of Public Utilities to reject a rate increase of $111 million that is being sought by National Grid.

"At a time when many consumers in Massachusetts are experiencing layoffs or are taking home smaller paychecks, National Grid is seeking to improve its own bottom line with a massive rate hike and rate plan that almost exclusively benefits the company and its shareholders," Attorney General Martha Coakley said. "We urge state regulators to put the interests of ratepayers above the Company's shareholders and reject the company's $111 million rate hike. Such an increase is neither warranted nor justified during the best of economic times yet alone when consumers can least afford it."

Coakley's office has also requested that National Grid's rates be reduced by approximately $36.4 million instead. The rate reduction request would be in conjunction with a proposed set of modifications sent to the DPU in a September brief that focuses on National Grid's decoupling proposal and rate plan.

Coakley's office has scrutinized National Grid's request over a three week period through its Office of Ratepayer Advocacy, which serves as the utility ratepayer advocate and is authorized to intervene in connection with matters involving rates, charges, prices or tariffs of any electric company doing business in Massachusetts.

Coakley's office, in the course of its investigation, found that many of National Grid's rate increase proposals are unsupported by evidence put forth and are inconsistent with DPU precedent.

Following her investigation, Coakley has request that National Grid's debt structured be changed to add short-term debt. She has also requested that the costs of long-term debt be changed to be more in line with other utilities.

Coakley has also asked for the elimination of a proposal meant to recover close to $30 million from ratepayers associated with restoring efforts following a December 2008 ice storm. Coakley has recommended that these costs be spread out over several years.

Elimination of non-union salary and benefits costs increases and executive incentive compensation are also sought, as are the elimination of the cost recovery mechanism for a previously required inspection and maintenance program.

The attorney general also recommends eliminating certain company rent and lease expenses and a reduction of the company's rate case expense, which is the cost associated with the filing of its case.

Additional suggested changes include adjusting the depreciation rates of the company, a reduction in rates to account for likely savings following the 2008 National Grid - Keyspan merger, and a downward adjustment of the cost of equity from 11.6-percent to 9.5-percent.

If Coakley's requested changes are made, she says, the $111 million rate increase would be eliminated and the $36.4 million downward adjustment of the company's rates would be possible.

The DPU is required to render a decision on the petition before the end of November 30.

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