State Cuts Proposed NSTAR Gas Hike by 41 Percent

The Massachusetts Department of Public Utilities ordered a reduction in the rate increase NSTAR Gas Company proposed late last year for its approximately 276,000 customers in 51 communities in central and eastern Massachusetts on Friday.

The Department of Public Utilities’s action reduced NSTAR Gas Company’s initial revenue request by $18.8 million – decreasing NSTAR Gas Company’s requested increase of $45.9 million (8.6 percent) to an increase of $27.1 million (5.1 percent).

The decision marks the first time that NSTAR Gas’ gas distribution rates have changed since 1991.

The Town of Framingham is served by NStar Gas. The rates approved in yesterday’s Order will take effect on January 1, 2016.

The action by the State follows a 10-month investigation that included five public hearings throughout the Company’s service territory, 14 days of evidentiary hearings, and a review of more than more than 2,500 exhibits.

“By significantly reducing the rate increase proposed by NSTAR Gas Company, the Order issued by the Department the Public Utilities strikes the appropriate balance between minimizing impacts on ratepayers and ensuring a safe, reliable distribution system,” said DPU Chair Angela M. O’Connor, in a press release.

The DPU’s decision today includes the approval of a revenue decoupling mechanism.

Decoupling eliminates the financial barriers to full participation by the Commonwealth’s investor owned utilities, like NSTAR Gas, in demand-reduction and energy efficiency efforts. Decoupling allows the Company to fully engage in promoting all available cost-effective energy efficiency for its customers.

This decision is the first time that the DPU has been able to undertake an open and transparent look at the rate structure of the Company since its last fully litigated rate case in 1987, 24 years ago.

In the Order, the typical residential heating customer, using 160 therms per month, will pay approximately $8.68 per month less than those rates initially proposed by the Company, or 33 percent less. The typical residential non-heating customer, using 15 therms per month, will pay approximately 18 cents per month less from that proposed by the Company, or approximately 1 percent less.

The DPU also provided benefits for ratepayers by allowing a much smaller return on equity than the company proposed—9.8 percent instead of the 10.25 percent proposed by the company.

Additionally, the DPU increased the discount available to eligible low income customers from 18.4 percent to 25 percent on their total gas bill, which will result in lower bills for eligible customers.