Boston has two gas companies. Eversource is one of them. According the SEC filings Tom May , CEO of EverSource made $8.8mlm last year. This is a utility. May is not a founder, he has not created huge value. in fact rate payer would argue he has not served us.
Mr. May’s compensation is about 10% of the value of the gas leaks in the city of Boston alone. Clearly Everource has enough money to fix our 3,500 gas leaks and save our environment, trees and kids.
Please share widely!
The way this works, usually, is that the cost to fix infrastructure is passed on to consumer. And there is little transparency in these costs that are passed on, so consumers don’t even know what they’re paying for,
It’s not how things should be — just how things are.
In the case of gas companies, some infrastructure spending is entitled to recovery of and on, other infrastructure spending receives recovery of but not on, and still other infrastructure spending receives recovery neither of nor on. Finally, some infrastructure isn’t a regulated asset at all, and receives payments either via a two-party contract, wholesale market transaction, or regional/national price allocation scheme set forth by an RTO, FERC, etc.
“Getting passed on” depends entirely on the state and laws thereof, the kind of infrastructure, and the prudency of the expenditures.
The cost of freaking TV commercials after a very expensive and entirely unnecessary rebrand. Seeing those really gets me fired up.
If you have any documentation that details how the rebrand costs were paid, I’d love to read them.
Almost everything a corporation does is eventually paid for by the customers of that corporation.
Unless the regulators are prepared to let the company take the heat. All the way to bankruptcy if necessary. But that is almost never what happens.
Eversource is a great example. It is but the latest incarnation of a company whose entire business plan has been to get into a little bit of trouble and then come running to regulators for a bailout. Who roll over because the alternative is doom and gloom from bond rating agencies, political sabre rattling, and higher interest rates on debt (which is, of course, paid by ratepayers).
You and I know things aren’t supposed to work that way but with
Boston EdisonNStarEversource, they always have.PS to Doubleman: And that my friend is why “Eversource” pays for all those rebrandings! To escape the past.
Don’t wrap me up in your untrue, fact-free assertions.
There is a set of costs that Eversource can pass on to their customers. Not included in recoverable costs are branding costs, PR/good will costs (pdf, see p. 53), or certain merger rate credits (see II(2) ).
So there are three examples of non-recoverable costs applicable to Eversource. I’m not arguing that Eversource is doing everything right, not by a long shot. I do ask that we bring facts to the discussion though. I speak from personal professional experience: environmental and social activists are much more likely to achieve success when interacting with regulated utilities when they stick to facts based in law rather than throw out assertions without support.
Nonrecoverable costs are at best a useful fiction, if regulators are serious, that can nudge the IOUs to behave a little bit as though they were players in a competitive market. A little. (I like full-blown performance-based ratemaking better for that purpose, but that’s another discussion).
Stomv, you seem to be taking this awfully personally. I can’t think why. I certainly was not trying to upset you.
I think the record bears me out about Boston Edison and its aliases. I could say the same about many (but not all) of the distribution utilities. I’m not in the field any more but I do not believe it has changed.
but, this is what I do for a living. I work on behalf of consumer advocates, environmental advocates, and local, state, and federal governments in utility cases. Often times, I work as an expert witness for an intervenor who is opposing some part of a utility proposal.
I know how this stuff works because I do it every day. It is my personal experience that utilities aren’t the bogeymen that they are often portrayed to be, in part because the Commission, the consumer advocate, and other intervenors participate in the adversarial process that helps ensure the outcomes are more fair.
When folks make comments about cost recovery that are flat out wrong (and in this case the error has been demonstrated), it’s just not helpful. Intervenors have had success not by complaining about everything and anything with no regard for facts, but rather by finding specific problems and using laser focus to modify those specific issues.
Nonrecoverable costs are not at all a fiction. Read a 10-Q. Nonrecoverable costs are what keeps CEOs up at night, because it is a huge drag on the quarterly dividend. For regulated utilities, you have to make an awful lot of right decisions to wipe out one oh shit decision. Nonrecoverable costs are very real, and they have a disproportionately high impact on dividends. Pretending that nonrecoverable costs don’t exist, that they’re somehow magically recovered anyway when neither Commission, consumer advocate, industrial advocate nor environmental advocate is looking, or that investors simply don’t mind that financial loss simply doesn’t match my experience — nor does it align with common sense.
My own view of regulated utilities is also nuanced. Among other things, they have been the engines of significant energy efficiency since the 1990s. Recall, however, the significant effort to force them to do the right thing (and make money doing it). Or maybe you were not around for that, mister expert witness.
Which brings me to one unflattering thing I will say about the utilities. With a few exceptions, they are astonishingly stupid. They can be ideological, as in their death-dance with nuclear power and their opposition to energy efficiency and renewables (contra the interests of their shareholders).
And the basic reason they are so dumb is moral hazard. There is no economic advantage to intelligence. There’s a regulatory safety net that bails out their stupidity. But for that, NU would not have merged with Edison to form Eversource, it (or someone else) would have acquired Edison’s bankrupt husk years ago, as it did Public Service Company of New Hampshire’s (which just went too far beyond the pale).
What economists call rent-seeking activity is part of their business model and it works for them: see Tom May’s paycheck.
As for the sleepless CEOs, sure, regulators can make them sweat a little, and the good ones do. But at the end of the day, all of the money has come from ratepayers.
How could it be otherwise? The sole source of all of Eversource’s revenues is its customers.
argument about Planned Parenthood.
PP has actual other sources of revenue. Eversource has only ratepayers.
If my kid is a drug addict, and I pay his rent, I’m supporting/enabling his drug habit. It doesn’t matter if he has other sources of revenue.
The “fungible” argument with Planned Parenthood goes something like this. Money is fungible, and if one drop of PP’s money comes from tax revenues that constitutes federal funding of abortion and by extensions forcing anti-abortion taxpayers to violate their preferences. (I’m not going to go into that, except to not that is is not my argument, just the argument as I understand it.)
There the fungibilty is between federal and non-federal funds. In the case of Eversource, all the money comes from ratepayers. Even debt is essentially using ratepayer revenue streams as collateral, or else physical assets paid for by ratepayers, and the ratepayers are the one who pay off the debt in any case.
That is why I say your comparison to PP is inapt. The observation that customers are the source of the money that pays for advertising and lobbying is very different from an argument that federal funding for PP’s non-abortion activities is morally wrong because it comingles in some abstract spiritual sense with abortion activities.
The two are nothing alike.
who helped to shut down state legislative action on new solar energy investments in Massachusetts at the end of last year, furthering the (short-term) interests of Eversource?
And who, as the chair of the governance committee of the Board of Bank of America, successfully pushed to give the Bank of America CEO the additional title of Chairman of the Board, which meant that as Chairman of the Board he was in charge of overseeing his performance as CEO? (In 2009, as “The Great Short” was getting started, Bank of America shareholders voted to separate the two roles in the interests of transparency.)
Plus, May earned $260,000 as a Bank of America board member last year.
Who gives money to just everybody at the top of the power structure, including Rosenberg and DeLeo? He did switch to Baker/Polito in late 2013 from Patrick and Coakley. His last three are Rosenberg, Dempsey, and Golden.
guy and the same M.O.
Former state senator, but previously when he was a rep, Chair of the Joint Committee on Energy. He was the recipient of all sorts of money from these regulated industries. Doesn’t seem right. Of course the Cape Wind people gave to him as well, but I didn’t here any complaints about that. I think there should be some sort of prohibition though if you are regulated.