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Thursday, August 4, 2011

Utility rate hike draws criticism from Fitchburg mayor


FITCHBURG —  Mayor Lisa A. Wong yesterday denounced the state Department of Public Utilities’ decision late Monday night to allow a rate hike requested by Fitchburg Gas and Electric Light Co., which is owned by Unitil Corp. of New Hampshire.

Ms. Wong said she is asking Gov. Deval L. Patrick to intervene on behalf of city residents and businesses who are being “dramatically and negatively impacted.”

“The decision to raise the rates of a utility company in order to protect corporate profits at the expense of the hardworking people of Fitchburg is an outrage,” Ms. Wong said in a statement yesterday.

“Unitil (FG&E) is a company that already charges more and does less for the consumer as evidenced by their past record. How can the DPU, who should be protecting ratepayers, justify that they deserve to put more money in their pockets?”

In its decision, the DPU shaved about $7 million — 31 percent — off of the investor-owned utility’s $22 million request, which the company sought to recover costs related to the December 2008 ice storm.

The DPU’s order also holds the company to the lowest return on equity it has allowed in any utility rate case in at least the past 50 years, providing the company a return on equity of 9.2 percent, rather than the 10.7 percent return that was requested. The order also rejected several capital financing proposals that would have shifted more costs to ratepayers.

In denying the storm expenses, the DPU cited the company’s poor performance in preparing for and responding to the ice storm, which left some of its customers without power for as long as two weeks. The DPU’s order shrinks the electric division’s revenue increase by 54.2 percent and the gas division’s revenue increase by 16.3 percent from the amounts requested.

The rate hike means that regular residential and low-income residential electric customers in Ashby, Fitchburg, Lunenburg and Townsend will see average monthly increases of $6.08 and $2.70, respectively. Gas customers from those communities, as well as Gardner and Westminster, will also see monthly increases.

“The bottom line is that we have a government agency that reinforces a regulated company’s right for a profit over the rights of the citizens to have fair and manageable utility rates and the Governor needs to intercede,” said Ms. Wong. “Believing that it is enough to lower a company’s allowable rate of return from 10.7 percent to 9.2 percent in an economic climate where people are losing their homes and jobs is unconscionable.”

The mayor has been part of an effort to pass the “Muni bill” that would allow municipalities to form their own electric companies.

Alec S. O’Meara, head of Unitil’s media relations department, said the company supports the state’s process of reviewing rate increase requests.

He said the purpose of a rate case is to open up the books and show what operating expenses are. The DPU makes a determination on what expenses are prudent and what should be included in the rates, he said.

“The DPU conducted a thorough, six-month review in which all interested parties were allowed to serve as interveners, including the city of Fitchburg,” Mr. O’Meara said. “Following the process, the DPU issued their order, and in their own words, said it is a tough order. Unitil is hopeful that all parties will be able to move forward from this and turn the page on the 2008 ice storm.”

Ms. Wong said she is not ready to do that.

“Unitil is a company that has been criticized by just about everyone for their performance during the ice storm of 2008, including failing to check on citizens who depend on electricity to stay alive during this same storm,” she said. “This is the very same company who has spent significant amounts of money and time to ensure they get every penny of profit.”