Eversource Energy is seeking approval for a nearly $96 million base distribution rate hike in Massachusetts and the investment of $400 million over five years into its grid as part of a larger modernization plan to deliver cleaner and more reliable electricity.
The utility filed the request for a performance-based ratemaking mechanism on Jan. 17 with the Massachusetts Department of Public Utilities. Eversource claims the rate hike will allow it to recover the costs associated with delivering "top-tier" reliability by incorporating capital investments. In accordance with revenue decoupling, the performance-based ratemaking mechanism would adjust rates annually starting in 2018 and substitute for the capital-cost recovery mechanism that regulators recently approved for other electric companies.
The company cited the rapid pace of innovation in the power sector in filing the request. "The rate of change taking place in the industry due to the integrated forces of technological advancement, deepening customer engagement and a clean-energy mandate is creating unprecedented challenges for electric-utility operations," it said.
The changes and investments are also aligned with customers' desire for a more modern, cleaner and flexible power system, said Craig Hallstrom, president of Eversource's electric operations in Massachusetts.
"Our customers are expressing increasing interest in playing a more active role in their energy management with solar panels and other technologies," Hallstrom said in a news release. "Our plan includes the tools to help make the integration of solar safer and more streamlined."
Hallstrom said Eversource customers are experiencing fewer and shorter outages thanks to "smart investments in sophisticated technology." The company plans to invest in improved reliability, electric vehicle infrastructure and energy storage systems, he said.
In total, the delivery rate changes would recover a net increase in delivery revenue of $60.2 million annually for NSTAR Electric Co. and $35.7 million for Western Massachusetts Electric Co. The requested rate hikes for the two Eversource subsidiaries would lock in annual operating cost savings of $30 million that resulted from the 2012 merger of NSTAR and Northeast Utilities.
If approved, the rates would also alleviate a revenue deficiency of roughly $60 million for the company's eastern Massachusetts service area by increasing residential bills by $8.45 a month, or 7%, for 550 kWh of electricity. Rates in the western Massachusetts service area would increase 10%, adding $11.64 to a monthly residential bill for 550 kWh of electricity.
Eversource proposed the rate hike as part of its new Grid-Wise Performance Plan to implement a smarter, more technologically-advanced energy grid and a capital investment program of $400 million over the next five years, starting Jan. 1, 2018.
The investments, which do not have a separate cost-recovery mechanism, will finance the increased deployment of advanced automated devices and technology to reduce the frequency and duration of power outages; an energy storage pilot program to demonstrate the viability and promote adoption of storage technologies; an enhanced electric-grid management system, including tools such as remote sensing and switching to assist in integrating distributed energy resources; and an electric vehicle charging infrastructure program.
Daniel Gatti, a policy analyst for the Union of Concerned Scientists, said in the same news release that the investments by Eversource will close "critical gaps" in electric vehicle charging infrastructure that address multiunit dwellings, workplace charging, direct-current fast charging along major highways and solutions for disadvantaged communities.
A final decision by the DPU is expected by Nov. 30, 2017, and if approved, the new rates would go into effect Jan. 1, 2018. (DPU Docket: 17-05)