Amendment ID: S3143-1

Amendment 1

Protect Constituents From Unreasonable Utility Profits

Ms. Comerford and Messrs. Collins and Mark move that the proposed new text be amended by adding the following section:-

SECTION X: The department of public utilities shall investigate and review best practices for setting allowed rates of return on common equity for electric and local distribution companies. In conducting the investigation, the department shall ensure that rates of return on common equity preserve an electric or gas company’s financial integrity, allow the company to attract capital on reasonable terms and support returns on investments comparable to returns on investments of similar risk, all while considering whether and how departmental practice might (i) have allowed rates of return that are higher than necessary; (ii) have led to overinvestment in infrastructure; (iii) be modified to employ a wider range of proxy groups and a wider range of inputs in the modeling or estimating of potential rates of return, with the objective of reducing the gap between allowed rates of return and the cost of equity; (iv) be modified to facilitate comparisons with independent third-party return forecasts and financial benchmarks, including, but not limited to, United States Department of the Treasury bond yields of appropriate maturity and capital market assumptions published by reputable financial institutions and investment analysts; (v) be modified to include other regulatory mechanisms, including, but not limited to, performance-based mechanisms; and (vi) otherwise mitigate ratepayer impacts by more closely aligning the return on equity with the cost of capital.

The department shall complete its investigation of best practices for setting allowed rates of return on common equity on or before October 1, 2027. Should the department determine that implementing changes to its practices in these respects necessitates legislation, it shall send a report and draft legislation to the joint committee on telecommunications, utilities and energy, the senate and house committees on ways and means and the clerks of the senate and the house.