Regulators punish Emera, allow half the rate increase it wanted

Gabor Degre | BDN
Gabor Degre | BDN
Supplies and parts sit near the office of the Swan’s Island Electric Cooperative, which Emera Maine plans to buy. The utility asked regulators to consider some of its associated costs in its rate case settled Thursday, but regulators decided to set that consideration aside for a separate case, should the deal go through.
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Regulators gave Emera Maine managers and shareholders an uncommon slap on the wrist.
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PORTLAND, Maine — Regulators gave Emera Maine managers and shareholders an uncommon slap on the wrist Thursday by cutting in half the utility’s request to raise rates.

The three-member Maine Public Utilities Commission voted Thursday to allow Emera to raise the rates it charges for distributing electricity by about 3.7 percent, or $3 million. For an average customer, using 500 kilowatt-hours per month, the company calculated it would add about $1.10 per month to power bills.

The company said it would add about $1.10 to bills in its Bangor Hydro district and about $1.07 to bills in its Maine Public Service district, serving Aroostook County and parts of Washington County.

Emera’s original proposal would have raised the average monthly bill by more than $2.40.

While the vote Thursday allowed Emera to raise its 2017 distribution rates, the approval comes at a much lower level than the company requested.

Regulators took issue with three major parts of the company’s request, determining that its shareholders should bear some of the burden of cost overruns for two large projects and that the company’s overall rate of return should suffer some financial consequences for inefficient management practices.

Emera Maine had challenged the commission’s ability to reduce its calculated rate of return based on findings of mismanagement. Commissioners defended the move.

“The length of time that’s passed since it’s been used does not make it unlawful,” said Commissioner Carlisle McLean, noting commissioners used the tactic to reduce rates in the early 1990s.

The commission’s decision also limits the amount Emera will be able to charge ratepayers for two projects that regulators found through a months-long audit that the company mismanaged.

The audit revealed that customer service responses and billing errors spiked after Emera implemented a new customer information system that went far over its initial budget projection and launched almost two years late in a partially functional form.

Alan Richardson, Emera Maine’s president and COO, said in a prepared statement that the company took those concerns seriously.

“We are absolutely committed to addressing them, improving our service to our customers, and have already begun to do so,” Richardson said.

For the project that’s cost $30.8 million so far, regulators ruled mismanagement led to $2.4 million of the cost and that the amount should be subtracted from the company’s request.

Regulators also said Emera could have spent less on a Bar Harbor substation, which it built using a more expensive site and design in order to appease neighbors and resolve a lawsuit seeking to block the initial project.

The company ultimately moved the project from a site on Woodbury Road to a Prospect Road site, adding $3.4 million to the $5 million cost of the initial site and design.

The commissioners ruled to exclude that extra $3.4 million from the amount Emera will be able to recover through its distribution rates.

 



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