The Commonwealth of Massachusetts —— DEPARTMENT of PUBLIC UTILITIES
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The Commonwealth of Massachusetts —— DEPARTMENT OF PUBLIC UTILITIES D.P.U. 18-150 September 30, 2019 Petition of Massachusetts Electric Company and Nantucket Electric Company, each doing business as National Grid, pursuant to G.L. c. 164, § 94 and 220 CMR 5.00, for Approval of General Increases in Base Distribution Rates for Electric Service. ____________________________________________________________________________ APPEARANCES: Cheryl M. Kimball, Esq. Daniel P. Venora, Esq. Jameson Calitri, Esq. Ashley S. Wagner, Esq. Keegan Werlin LLP 99 High Street, Suite 2900 Boston, Massachusetts 02110 -and- Alexandra E. Blackmore, Esq. Andrea G. Keefe, Esq. National Grid 40 Sylvan Road Waltham, Massachusetts 02451 FOR: MASSACHUSETTS ELECTRIC COMPANY AND NANTUCKET ELECTRIC COMPANY Petitioner D.P.U. 18-150 Page ii Maura Healey, Attorney General Commonwealth of Massachusetts By: Joseph W. Rogers Elizabeth A. Anderson Joseph F. Dorfler Alexander M. Early Ashley Gagnon John J. Geary Matthew E. Saunders Assistant Attorneys General Office of Ratepayer Advocacy One Ashburton Place Boston, Massachusetts 02108 Intervenor Department of Energy Resources Commonwealth of Massachusetts By: Colin P. Carroll, Esq. Ben Dobbs, Esq. Rachael Graham Evans, Esq. Robert H. Hoaglund II, Esq. 100 Cambridge Street, Suite 1020 Boston, Massachusetts 02114 Intervenor Amy E. Boyd, Esq. Acadia Center 51 Milk Street, Suite 501 Boston MA 02109 FOR: ACADIA CENTER Intervenor Jen Bosco, Esq. Charles Harak, Esq. National Consumer Law Center 7 Winthrop Square, 4th Floor Boston, Massachusetts 02110 FOR: THE MASSACHUSETTS ENERGY DIRECTORS ASSOCIATION Intervenor D.P.U. 18-150 Page iii John W. Giorgio, Esq. Matthew G. Feher, Esq. KP Law, P.C. 101 Arch Street, Floor 12 Boston MA 02110 FOR: TOWN OF NANTUCKET Intervenor Paul G. Afonso, Esq. Jesse S. Reyes, Esq. Brown Rudnick LLP One Financial Center Boston MA 02111 FOR: CHARGEPOINT, INC. Limited Intervenor David Ismay, Esq. Conservation Law Foundation 62 Summer Street Boston MA 02110 FOR: CONSERVATION LAW FOUNDATION Limited Intervenor Kevin Conroy, Esq. Kelly Caiazzo, Esq. Foley Hoag LLP 155 Seaport Boulevard Boston MA 02110-2600 FOR: CUMBERLAND FARMS, INC., GLOBAL PARTNERS LP, THE NEW ENGLAND CONVENIENCE STORE AND ENERGY MARKETERS ASSOCIATION, THE SOCIETY OF INDEPENDENT GASOLINE MARKETERS OF AMERICA, AND THE NATIONAL ASSOCIATION OF CONVENIENCE STORES Limited Intervenors D.P.U. 18-150 Page iv Elisa J. Grammer, Esq. Law Offices of Elisa J. Grammer 48 Coffin Street West Newbury MA 01985 FOR: GREEN ENERGY CONSUMERS ALLIANCE, THE SIERRA CLUB, THE NATURAL RESOURCES DEFENSE COUNCIL, AND THE UNION OF CONCERNED SCIENTISTS Limited Intervenors Joshua Berman, Esq. The Sierra Club 50 F Street NW, 8th Floor Washington DC 20001 FOR: THE SIERRA CLUB Limited Intervenor David C. Fixler, Esq. John A. DeTore, Esq. Greenberg Traurig, LLP One International Place, Suite 2000 Boston MA 02110 FOR: NORTHEAST CLEAN ENERGY COUNCIL Limited Intervenor Bernice I. Corman, Esq. EKM Law, PLLC 800 Connecticut Avenue, NW, Suite 410 Washington DC 20006 -and- Kevin Auerbacher Sr. Counsel, Legal Tesla, Inc. 1000 K Street, NW, Suite 101 Washington DC 20001 FOR: TESLA, INC. Limited Intervenor D.P.U. 18-150 Page v Carol J. Holahan, Esq. Foley Hoag LLP 155 Seaport Boulevard Boston MA 02210-2600 FOR: AMERICAN PETROLEUM INSTITUTION Limited Participant Robert A. Rio, Esq. Associated Industries of Massachusetts One Beach Street, 16th Floor Boston MA 02109 FOR: ASSOCIATED INDUSTRIES OF MASSACHUSETTS Limited Participant Jinjue Allen, General Counsel Enel X North America, Inc. One Marina Park Drive, Suite 400 Boston MA 02210 FOR: ENEL X NORTH AMERICA, INC. AND ELECTRIC MOTOR WERKS, INC. Limited Participant Kevin F. Penders, Esq. John M. Sullivan, Esq. Preti, Flaherty, Beliveau & Pachios, LLP 60 State Street, Suite 1101 Boston MA 02109 FOR: ZECO SYSTEMS, INC. D/B/A GREENLOTS Limited Participant Laura S. Olton, Esq. LSO Energy Advisors, LLC 38 Thackeray Road Wellesley MA 02481 FOR: POWEROPTIONS, INC. Limited Participant D.P.U. 18-150 Page vi TABLE OF CONTENTS I. INTRODUCTION ................................................................................... 1 II. PERFORMANCE-BASED RATEMAKING PROPOSAL .................................. 7 A. Introduction .................................................................................. 7 B. PBR Mechanism Proposal................................................................. 8 1. Introduction ......................................................................... 8 2. Formula Elements ................................................................. 9 a. PBR Term .................................................................. 9 b. X Factor ................................................................... 10 c. Consumer Dividend ..................................................... 14 d. Exogenous Cost Factor ................................................. 14 e. Earnings Sharing Mechanism ......................................... 15 3. Positions of the Parties .......................................................... 16 a. Attorney General ........................................................ 16 i. Introduction ...................................................... 16 ii. PBR Term ....................................................... 17 iii. X Factor .......................................................... 17 (A) Introduction ............................................. 17 (B) TFP Sample Time Period ............................ 17 (C) TFP Sample Size ...................................... 19 (D) Capital Cost Specification Method ................. 21 iv. Consumer Dividend ............................................ 26 v. Earnings Sharing Mechanism ................................ 27 vi. PBR Adjusted Revenues ...................................... 27 b. Acadia Center ............................................................ 28 c. Company .................................................................. 29 i. PBR Term ....................................................... 31 ii. X Factor .......................................................... 32 (A) Introduction ............................................. 32 (B) TFP Sample Time Period ............................ 35 (C) TFP Sample Size ...................................... 36 (D) Capital Cost Specification Method ................. 37 iii. Consumer Dividend ............................................ 43 iv. Earnings Sharing Mechanism ................................ 44 v. PBR Adjusted Revenues ...................................... 45 4. Analysis and Findings ........................................................... 45 a. Introduction ............................................................... 45 b. Department Ratemaking Authority ................................... 46 c. Evaluation Criteria for PBR ........................................... 48 d. Rationale for PBR ....................................................... 49 D.P.U. 18-150 Page vii e. PBR Formula Elements ................................................ 54 i. PBR Term ....................................................... 54 ii. X Factor .......................................................... 56 (A) Introduction ............................................. 56 (B) TFP Sample Time Period ............................ 57 (C) TFP Sample Size ...................................... 58 (D) Capital Cost Specification Method ................. 59 (E) Conclusion .............................................. 60 iii. Consumer Dividend ............................................ 60 iv. Exogenous Cost Factor ........................................ 65 v. Earnings Sharing Mechanism ................................ 69 vi. PBR Adjusted Revenues ...................................... 72 5. Conclusion ......................................................................... 74 C. Performance Incentive Mechanism and Scorecard Metrics ........................ 76 1. Introduction ........................................................................ 76 2. Company Proposal ............................................................... 77 a. Customer Ease ........................................................... 77 b. Peak Reduction ........................................................... 79 c. Transportation Electrification ......................................... 85 d. Scorecard Metrics ....................................................... 87 3. Position of the Parties ........................................................... 89 a. Attorney General ........................................................ 89 b. Acadia Center ............................................................ 92 c. American Petroleum .................................................... 93 d. Clean Energy Parties ................................................... 93 e. CLF ........................................................................ 94 f. DOER ...................................................................... 95 g. FSCS Coalition ........................................................ 100 h. MEDA ................................................................... 101 i. NECEC .................................................................. 102 j. Tesla ..................................................................... 107 k. Company ................................................................ 108 4. Analysis and Finding........................................................... 120