Attorney General Maura Healey has been testifying against the increase throughout the state.
PITTSFIELD, Mass. — There were a lot of numbers being thrown around Monday night at the public hearing for Eversource's proposed electrical rate increase.
Seventy-three is the number of teachers the city is already planning to lay off while $6.1 million is the salary of Eversource CEO James J. Judge.
The figure of $708,336 is how much the mayor says the proposed Eversource rate increase would add to the city budget.
The electric company shut off power to 10,903 homes in 2015. One dollar and 30 cents per credit would be added to tuition at Berkshire Community College to cover the rate increases. Onyx Specialty Papers would be looking at electric bills of $1.1 million.
Those were the numbers being delivered to the state Department of Public Utilities on Monday. Eversource is seeking a rate increase for customers of NStar in the eastern portion of the state, where it is looking to raise an additional $60.2 million in revenue. And for customers of Western Massachusetts Electric Co., where it is seeking $35.7 million in additional revenue.
"We know there is never a good time for a rate increase and that no rate increase is welcomed by customers. We've have been meeting with our large customers in Western Mass and we are looking for ways to address their concerns and suggestions," said Eversource's Chief Customer Officer Penni McLean-Conner.
Conner says the company is seeking the increase, which equates to about a 10 percent hike for residential customers, to address mostly capital concerns. The company wants to generate additional funds to upgrade the electric grid, build energy storage areas, and efficiency projects such as advancing the rollout of electric cars.
"Despite all of our efforts to reduce costs, we have needed to make capital investments to keep the distribution system and maintain service quality," Connor said.
Conner says this proposal will reset a deficit in Western Massachusetts because of recent capital upgrades and increased maintenance — which Conner said has led to a 43 percent decrease in outages and a 23 percent reduction in the length of the outage.
"Currently we are operating in Western Massachusetts with a revenue deficiency. It means that the cost associated with serving our customers here in Western Massachusetts are greater than the revenues we are collecting associated with the rates that are in place. The main driver of this deficiency are capital projects that we invested in and are benefiting our customers," Connor said
Conner says the proposal also comes with the opportunity to raise rates slightly each year to compensate for a loss of revenue for capital through the state's revenue decoupling policies. She says the company has lost money that would have went to the capital projects.
She added that the 2012 merger of NStar and Northeast Utilities saved some $11 million that is not included in this rate increase. And the company doubled its savings from energy efficiency programs.
Attorney General Maura Healey, however, isn't buying it. Healey says the company reels in a significant amount of profit and this proposal includes a return on equity — a measure of profitability — to shareholders of 10.5 percent. That ROE is significantly higher than other businesses in the area and higher than other electric companies across the country — with Maine and Connecticut restricting ROEs to around 9 percent.
"Every 1 percent reduction in the company's ROE here will save WMECO customers almost $4 million a year," Healey said. "By adopting a reasonable ROE, the department can save Massachusetts residents and businesses millions over the next five years."
She added that in a five-year period, shareholders were getting an 89 percent return. She questioned changes to the rate structure that allows the company to increase rates somewhat each year by around 4 percent. She questioned how it disproportionately will impact the customers in Western Mass compared to eastern Mass.
Overall, she said it is about fairness.
"This is an important opportunity for the department in particularly to reset the balance between company profits and customer rates. When so many customers in Western Massachusetts are struggling to make ends meet, and businesses in particularly here and in Western Mass are trying to lower their energy cost to maintain and grow jobs... It is time to return money to customers," Healey said.
State Rep. William "Smitty" Pignatelli remembers when WMECo came for a similar increase in 2007 and nearly immediately, two South County paper mills closed.
"Within weeks of that rate increase going into effect, two paper mills ... closed their doors and hundreds of Berkshire residents lost their job," Pignatelli testified.
He got on the phone with the utility company executives to discuss the issues. It was a conference call and he was told part of the increase was there to help preserve the pension benefits. The workers at the mills only a year earlier voted to give up their own pensions to help save their jobs, only to have that money go to the electric company.
State Rep. Tricia Farley-Bouvier said she often talks to people who are hoping they can retire with 80 percent of their annual salary. But yet, Eversource's last chief executive retired with 116 percent of his $9 million salary. She said the executive vice president has a salary of $2.5 million, the chief operating office $3.8 million, and the president takes home more than $6.1 million.
"At $6.1 million a year Mr. [James] Judge earns $24,635 per day. Mr. Judge went to work this morning, finished his day between 5 and 7 p.m. and earned the same as the annual per capita income of a resident of Berkshire County," Farley-Bouvier said.
Meanwhile in the Berkshires, since 1990, median household incomes grew at a slower rate than the rest of the state and are now some 26 percent lower than the state average and the workforce has shrunk by 11 percent, she said.
"The fact that this unabashed money grab is to happen at the expense of the working people of Berkshire County is obscene," Farley-Bouvier said.
In Lanesborough, state Rep. Gailanne Cariddi is concerned about the impact the rate increase will have on the Berkshire Mall. The mall has about half of the storefronts filled and has lost anchors recently.
"The mall is not what it used to be. The mall will be much less than what it used to be if this rate hike goes through."
She countered Eversource's boasting of investing in upgrades for electrical storage, electric vehicles, and a modernized grid by reminding the audience numbering close to 300 people that it will be the ratepayers who will actually be funding that.
State Sen. Adam Hinds called the proposal unacceptable and says it will continue to disproportionately impact the Berkshires.
"We will be paying more than three times what we'd be paying in the eastern part of the state," Hinds said, saying the customer rates are simply too high. "Now it is time for increased consideration of customer rates. It makes no sense to ask for a 10.5 percent return on equity."
Increased rates only furthers a large population loss for the county, said state Rep. Paul Mark. He said as electric rates go up in all four western Massachusetts counties, businesses close, and people are forced to move away.
Crane Currency employees 325 people a year and Finance Manager Brendan Ronayne said the proposed increase will raise the company's bills by $550,000.
"Being in a fixed-price contract, this isn't something we can pass on to our customer," he said.
The Berkshire state delegation all provided comments on the case.
The company will have to absorb that cost until the end of its current five-year contract and then build that into its pricing, impacting its competitiveness.
Onyx Specialty Papers President Pat Begrowicz said the proposal would raise her bills by $775,000, bringing her cost to $1.1 million in 2019 for the same exact services she receives now. If the annual increases were approved as well, the cost would grow to $1.3 million by 2023.
"The cost of electricity is a real burden for us," she said. "Berkshire County desperately needs more businesses like Onyx, like Crane."
Berkshire Medical Center is estimating between $250,000 and $500,000 in increased costs.
1Berkshire President Jonathan Butler said the Berkshires don't have the same tools to recruit outside companies as places on the coast, so the future is based on its ability to support existing businesses.
He cited the population decrease and the comparison to the eastern part of the state where it is "becoming larger, younger, and wealthier" compared to the Berkshires. The Berkshires are closing schools and still trying to get high-speed internet to all corners.
"It is evident we already have our hands full," Butler said.
This increase will just make all of that progress even more difficult, he said. Job loss comes in the public sector as well. Mayor Linda Tyer said the city has reached its tax ceiling and every cost from now on equates to cuts to the budget. The 73 positions being cut from the School Department doesn't even include the rate increases, she said.
"I am deeply concerned that the impact will be far worse than I anticipate," Tyer said.
For the city, the proposal would call for a 27 percent increase is costs. She said the budget for electric will rise from $2.6 million to $3.3 million.
"An increase of 27 percent is completely unacceptable," City Council President Peter Marchetti said.
Superintendent Jason McCandless said, "Nearly every aspect of our business in public education runs on electricity."
For some in the audience, however, a number that stood out was 10,903, which is the number of shutoffs the company performed in 2015. That includes 1,600 in Pittsfield, according to resident Sandra Page.
"People cannot afford these bills and if rates go up then more people will be left behind," Page said.
She's heard stories of workers losing heat in the middle of winter and being forced to borrow money for short-term hotel stays. She says the real wages taken home by workers in various fields as housekeeping or restaurant work has been declining. More and more people are struggling to pay utility companies, she said.
"People are already struggling to pay for the basics," said resident Donald Cummings. "We can't let these corporations run wild."
Joann Seymour is a retiree who has done everything she can to reduce her electric bill.
"I have switched to LED bulbs. I have downsized to the 50-gallon water heater. I keep my thermostats between 60 and 65. I try what I can to keep my bills as low as I can, I am on the budget plan. I am still paying $200 a month," Seymour said.
Berkshire Community College President Ellen Kennedy testified that the increase will be 44 percent for the college. That will have to be passed onto the students at a rate of $1.30 more per credit — costing a full-time student $39 more a year before other increases are even considered.
McCandless rounded out the evening wrapping up the thoughts of many — from the protesters with signs to the elected officials with suits to the average resident — when he said "it's bad for business, it is bad for business, and it is bad for the families that call the Berkshires home."
The Department of Public Works will take the testimony and later offer a ruling on the proposal.
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