Protecting consumers from unreasonable utility rate increases
Impact
If enacted, this bill will alter the existing procedures for base rate determinations conducted by the Department of Public Utilities. The introduction of stricter guidelines against approving performance-based ratemaking mechanisms that derive benefits at the expense of consumer interests is expected to prevent automatic revenue increases that exceed inflation. This change would encourage utility companies to operate more efficiently and be more mindful of the financial implications for their consumers.
Summary
Senate Bill S2088, titled 'An Act protecting consumers from unreasonable utility rate increases', proposes significant amendments to Chapter 164 of Massachusetts General Laws. The primary objective of the bill is to protect consumers from excessively high rates set by utility companies. It introduces restrictions on approving returns on equity for electric and gas companies, ensuring that these rates align with the averages observed in neighboring states over the prior four years. This aims to create a more equitable landscape for consumers across the state, as it sets a benchmark for what can be deemed reasonable profit margins.
Contention
While support for S2088 may come from consumer advocacy groups and those worried about rising utility costs, it could face pushback from the utility companies concerned about the potential constraints on their profitability. Critics might argue that by capping the allowed return on equity, the bill may hamper investment in infrastructure improvements and innovations that could ultimately benefit consumers. As the bill moves forward, the discussions in the legislatures may revolve around finding a balance that protects consumer interests while ensuring that utility companies remain financially viable.
Prohibits public utilities from being eligible for rate treatment or other incentive or rate mechanisms that provide additional revenue to utilities in certain circumstances.