A proposal by the state’s largest electric company to increase its distribution rates nearly 20 percent is facing renewed scrutiny as the COVID-19 pandemic continues.
And one of the organizations that filed testimony last year opposing Eversource’s request for the N.H. Public Utilities Commission to approve the rate increase is now asking the commission to revisit the company’s calculations and projections.
Todd Fahey, AARP New Hampshire state director, said Tuesday that interest rates have dropped, energy demand is down, and a lot of state residents are struggling to make ends meet. And because all those things have happened since the pandemic began, Eversource’s original filing should be reviewed and the information in it updated.
“These are difficult times for Granite Staters, and it’s important that everybody acknowledge the difficulty that is facing people,” he said. “We also have one of the oldest populations in the nation and many people living on a fixed income. I think it’s important for them and their financial well-being to advocate on their behalf.”
In March 2019, Eversource filed a notice with the Public Utilities Commission, saying that it intended to submit requests for temporary and permanent rate increases. State law allows a utility company to request that the commission approve a temporary rate increase, usually lower than the permanent rate increase, rather quickly. That rate remains in effect until the conclusion of the proceedings over the permanent rate increase, which usually takes about a year.
Eversource submitted an April 2019 petition for a temporary distribution rate increase of about $33 million, followed by a petition in May for a permanent distribution rate increase of $69.9 million for the year. The $69.9 million would include the $33 million request, rather than being in addition to it, the petition stated.
Distribution rates are just one factor in a customer’s monthly utility bill, which also includes transmission, stranded cost recovery, system benefits and energy service rates.
A November 2019 filing from Eversource included its proposed permanent rate changes for customers.
For residential customers, overall electric rates would increase 7.3 percent under the proposal, while customers who use no more than 100 kilowatts a month would see their rates go up 4.3 percent.
Commercial and industrial customers not exceeding 1,000 kilowatts of electricity per month would see their rates increase 2 percent, and those that use more than that would have their rates increase by 1.8 percent. The outdoor-lighting service rate, which includes street lighting, would decrease by 17.8 percent.
According to a 2018 listing from the Nebraska Department of Environment and Energy, New Hampshire had the sixth highest electricity rate per kilowatt-hour after Hawaii, Alaska, Massachusetts, Connecticut and Rhode Island. New Hampshire’s rate at the time was 17.01 cents per kilowatt hour.
In testimony accompanying the May 2019 filing, William J. Quinlan, president and chief operating officer, listed the factors contributing to Eversource’s request, including a significant shortfall between operating revenues and capital investment that “if not addressed, will continue to expose the Company to additional financial degradation.”
He noted the need to adjust rates to cover the costs of managing vegetation along Eversource’s electrical distribution system and recover what was spent on this in past years. He also said the company needs to recover costs associated with restoring electricity to customers, primarily due to significant weather events in 2017 and 2018.
The last time Eversource, then known statewide as Public Service of New Hampshire, requested a rate increase was in 2009, and it went into effect in July 2010.
Since then, PSNH’s parent company, Connecticut-based Northeast Utilities, and Boston-based NStar merged and rebranded as Eversource Energy. Then, in 2018, Eversource completed the sale of its power-generating facilities. Both events created operational efficiencies, according to Quinlan’s April 26, 2019, testimony.
Further, Eversource invested more than $1 billion in its electric-distribution system during the past decade to improve the system’s reliability and reduce the frequency and duration of outages, according to a previous news release from the company.
“We recognize that rate increases are always difficult for our customers and seek to mitigate them wherever possible through sound financial management and cost-effective investment strategies that have enabled us to forego rate increases sooner,” Eversource spokesman William Hinkle wrote in an email Tuesday.
He added that Eversource also delayed its request to update its distribution rate until completing the sale of its power plants, “a timeline that was understood by all parties coming out of the divestiture settlement in 2015.”
In New Hampshire, Eversource provides distribution services for 211 cities and towns and represents about 70 percent of the total electric customers in the state. It has approximately 519,000 retail customers, about 441,450 of them residential, 75,000 commercial and 2,735 industrial.
Earlier this year, Eversource Energy, which also does business in Massachusetts and Connecticut, reported earnings of $909.1 million for 2019. That amount was lower than its 2018 earnings of $1.033 billion.
Eversource and the N.H. Public Utilities Commission reached a settlement agreement in June 2019 that allowed base distribution rates to be temporarily increased by $28.3 million, effective the following month. Other parties involved in the settlement agreement were the commission’s Office of the Consumer Advocate and The Way Home, a nonprofit organization focused on helping low-income individuals and families in the Manchester area.
N.H Consumer Advocate D. Maurice Kreis has been critical of Eversource’s proposed rate increase and has written about it in his Power to the People column for the news outlet InDepth NH.
Kreis said by phone last week that at the center of the rate case is the return on equity Eversource believes it should be awarded, which is 10.4 percent. That is “outrageously high,” especially during the economic recession the country is in now.
In May 2019 testimony on behalf of Eversource, Ann E. Bulkley, a consultant with Concentric Energy Advisors Inc. in Massachusetts, stated that the return of 10.4 percent is based in part on the regulatory, business and financial risk faced by the company. She added that the rate “fairly balances the interests of customers and shareholders.”
While it’s likely Eversource’s permanent rates would have been set by now, the pandemic has delayed the proceedings, extending the deadline by six months, Kreis said. At this point, a settlement agreement on the permanent rate increases is a no-go, he said, and hearings have yet to be scheduled.
When asked why a settlement agreement on permanent rates hasn’t been reached, Hinkle declined to comment, stating that settlement discussions are confidential.
“As the rate review moves forward with its new timeline due to the pandemic, we continue to focus on innovative solutions that ensure affordable, safe and reliable service for our customers and advance clean energy in New Hampshire,” he wrote in an email.