DPU cuts Unitil rate hike request
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Electric ratepayers in Unitil’s service area in North Central Massachusetts will see a smaller rate increase after the Patrick administration cut the utility’s request for a larger jump in its distribution rate.
Unitil, which serves Fitchburg, Ashby, Lunenberg and Townsend, had sought a $6.7 million increase in the distribution rate for its 28,000 electric customers in the region, citing a need to create a “storm fund,” according to a statement from the Massachusetts Department of Public Utilities (DPU).
But the DPU pared Unitil’s request to $5.4 million, arguing a larger increase would “unduly shift the burden of storm costs to ratepayers.”
The DPU said it also rejected the company’s proposal to implement revenue adjustment mechanisms that would have increased its distribution rates each year.
The agency said typical residential customers, using an average of 600 kilowatt hours of electricity per month, can expect a temporary increase in their bill of approximately $12 per month, or slightly less than 10 percent, until the end of 2014. Starting in 2015, customers’ bills should decrease by about 10 percent due to a drop in the “transition charge,” which allows companies to recover certain costs associated with their required divestment from power-generation resources in the late 1990s.
Alec O’Meara, a spokesman for Unitil, said in an email that the company is still reviewing the DPU decision. But he added that the average monthly increase of $12 cited by the DPU will actually be about $8 due to a decrease in the “supply rate” the utility charges. (The DPU said it doesn’t regulate that part of the bill.)
“The (DPU) is conscious that every dollar counts to customers,” DPU Chair Ann G. Berwick said in the DPU statement. “Our decision minimizes the impact on customers, while ensuring that the company will receive sufficient revenues to maintain safe and reliable service.”
John Harden, economic development specialist at the North Central Chamber of Commerce, said that while he could not comment on the Unitil decision specifically, “we support any effort to try and reduce” electric rates, given how high they are in the Fitchburg area and throughout the Northeast.
O’Meara said that, taking into account the various charges that appear on a typical electric bill, the “net effect” will be a decrease for ratepayers, whereas the initial proposal estimated a 0.3 percent rise.
The DPU also provided benefits for ratepayers by allowing a smaller return on equity than the company proposed—9.7 percent instead of the 10.25 percent it sought.
The findings follow 10 months of hearings, the DPU said.
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