POWER PROFITS: Who is banking off your utility bill?

BOSTON — It was a top issue in the midterm elections, driving people to the polls: the price of power.

In Massachusetts, utility bills are brutally expensive. Boston 25 News wanted to know how much of your money pays for the actual electricity and fuel we use — and how much goes into the pockets of investors.

For many Massachusetts families, opening that utility bill has become a moment of dread.

“I mean, my utility bills for an apartment is getting close to what I’m paying in rent,” one resident said.

“I remember being like, ‘yiiiikes’ when they would come in,” said another.

“All I can say is that they’re too high,” a third resident added.

“We’re an outlier”

Paul Craney, executive director of the Massachusetts Fiscal Alliance, says the state stands apart. “We’re among the most expensive in the nation. That we are an outlier. We’re not like the rest of the country,” Craney said.

The latest federal data shows just how expensive electricity is here. In August, Massachusetts residents paid an average of just over 30 cents per kilowatt-hour. That’s nearly 70% more than the national average, according to the U.S. Energy Information Administration.

Healey blames the utilities

Governor Maura Healey has accused utility companies of prioritizing profits.

“It’s the fault of the utilities,” Healey said in a one-on-one interview with Boston 25 News. “They need to be investigated and audited because they pad those charges.”

How much of your bill is profit

So, are utility companies excessively profiting off your power? Boston 25 News turned to a national utility watchdog that tracks just that.

“Recent studies have shown the utilities are making way too much profit,” said Itai Vardi of the Energy and Policy Institute.

The Energy and Policy Institute has a website that allows you to see just how much of your bill energy companies keep as profits. You type in the name of your utility company and how much your monthly bill costs. For example, when Boston 25 News entered Eversource and a $250 monthly bill, the tool showed Eversource takes $39.55 of that $250 bill for profit, or15.8%.

Vardi explained how the watchdog group calculates that number.

“We calculated this by looking at the net income as a percentage of the total operating revenue of the utility in a given year,” Vardi said. “That particular number spits out essentially how much you as a customer is paying for the utility profits. How much money the utility retains for each dollar that you pay in your electric.”

Eversource disputes the numbers

Eversource disputes the calculation. The company told Boston 25 News that on a $250 monthly bill, the power company has a $25 profit — or 10 percent.

The company’s full statement reads:

Energy affordability is understandably a significant concern for Massachusetts families and businesses, and we’re committed to transparency and helping customers better understand the costs that make up their bills while also keeping the maintenance infrastructure costs we can control as low as possible. Our distribution and transmission infrastructure costs, including earnings, represent approximately 40 percent of our Massachusetts’ customers total electric bills, with energy supply and public policies accounting for the other 60 percent. Energy supply is the largest, most volatile portion of any electric bill, and it is unquestionable that the region’s constrained energy supply is the primary driver of New England’s longstanding energy affordability challenge.

The Energy and Policy Institute’s calculator is wrong and inaccurate, using a flawed methodology that grossly overstates how much of an individual customer’s electric bill in Massachusetts goes toward utility earnings. The calculation relies on reported net income and revenues but excludes significant electricity supply costs paid directly to third-party suppliers and municipal aggregation programs. In Massachusetts, approximately 80% of our electric customers receive their supply from alternative suppliers, meaning roughly $2 billion in supply costs are not reflected in the calculation, causing a significant overstatement of earnings in the calculation.

The truth is that in Massachusetts, Eversource’s total ROE from distribution and transmission represents only about 10% of a customer’s total bill, or $20 of an average monthly bill of approximately $200. Importantly, as a regulated utility, all of our rates – including earnings – are subject to strict scrutiny, review and approval by regulators. We take seriously our important responsibility to help address the energy affordability challenge faced by customers across New England by vigorously managing the costs within our control while also making the investments necessary to maintain reliable access to the essential service we provide as we work to meet growing energy demand and support the Commonwealth’s energy goals.

We bring a customer-first focus on affordability and reliability to everything that we do, and we remain committed to working collaboratively with state leaders, regulators and other stakeholders to identify meaningful, sustainable ways to lower energy costs.

But Craney says utility profits aren’t the biggest problem. He points the finger at state energy policies.

“We are now starting to see in our electric bills, in our gas bills, all these utility bills have extra costs because of the policies we’ve been putting in place for decades now,” Craney said.

What will it take to bring bills down?

So, if we know some of the reasons driving up our utility bills, what’s it going to take to bring them back down?

Vardi says regulators have options. “The regulators again have the authority not to guarantee these, you know, 9-10% percent return on equity to shareholders, but lower them and also tie them to very specific performance metrics,” he said.

Craney sees a different fix. “The first thing we can do is look at the climate mandates and suspend them. Make them from mandates into goals,” he said.

Craney also warns that targeting energy company profits could discourage new investment in Massachusetts, at a time when the state needs more power.

This is a developing story. Check back for updates as more information becomes available.

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