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Massachusetts approves passing tax savings to Eversource ratepayers

Massachusetts regulators updated new electric base rates for Eversource Energy, lowering them almost $56 million from the previously approved level by incorporating the federal corporate tax rate reduction. The regulators also launched an investigation into how the lowered federal corporation tax rates will further affect utility customers.

The Massachusetts Department of Public Utilities issued an order Feb. 2 approving rates $55.9 million lower than initially requested by Eversource subsidiaries NSTAR Electric Co. and Western Massachusetts Electric Co. Eversource customers will now see a decrease in rates of about $20 million, or 1.8%, rather than the approximately $36 million increase that was initially approved Nov. 30 by the DPU following an initial 60% reduction from an original requested rate hike of $90.8 million.

After the Republican-controlled U.S. Congress and the Trump administration reduced the federal corporate tax rate from 35% to 21%, Eversource on Jan. 3 asked the DPU to recalculate its approved revenue streams and to pass the corporate tax savings to its customers. The rate cut is also in response to a Dec. 20, 2017, motion filed by state Attorney General Maura Healey that asked for a bigger rate reduction of approximately $74.09 million.

Under the new rates, Eversource customers in the eastern Massachusetts service territory will see a reduction in taxes of $47.6 million and an overall rate reduction of $35.4 million, rather than the previously approved rate increase of $12.2 million. Eversource's western Massachusetts customers are projected to see a reduction in taxes of $8.3 million and a reduction in rate increases from $24.8 million to $16.5 million.

The DPU also launched an investigation into how the reduced corporate tax rates will affect utility investments in clean energy technologies, reductions in greenhouse gas emissions and improvements in infrastructure resiliency. In a news release, DPU Chair Angela O'Connor stressed the importance of coupling the rate reduction with an examination of additional savings from federal tax reform in order to ensure "utility consumers are provided with the most reliable service at the lowest possible cost."

Massachusetts utilities are required to review the Federal Tax Cuts and Jobs Act and file proposals with the DPU by May 1 for approval to reduce rates to reflect the effects of the tax law. (DPU Docket Case No. 17-05)