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On 15 November 2018, Massachusetts Electric Company and Nantucket Electric Company (each d/b/a National Grid) filed with the Massachusetts Department of Public Utilities (DPU) a proposed change in base distribution rates and a proposed “performance-based ratemaking” (PBR) plan. The filing included a plan to expand the scope of National Grid’s electric vehicle (EV) infrastructure investment program. National Grid proposed to invest $167 million in EV charging infrastructure that it would own and operate (“Proposal”). A coalition of fueling station and convenience store owners, led by Cumberland Farm, Inc. (collectively, “Coalition”), opposed the Proposal on the grounds that it would unfairly and unnecessarily monopolize the emerging EV charging market in Massachusetts.

NERA was asked by a law firm representing the Coalition to address the following issues in expert testimony submitted before the DPU: (1) the extent to which the Proposal reflected an unusual diversion of ratepayer funds outside of the provision of traditional regulated services; (2) the risks that the Proposal would place on ratepayers and potential entrants into the EV charging market; (3) whether National Grid provided evidence of the proposed benefits of the Proposal; and (4) whether National Grid was entitled to rewards for EV adoption under its proposed PBR program.

With respect to (1), NERA identified multiple instances in which the Proposal did not meet applicable accounting and cost allocation standards for evaluating the proposed expenditure of regulated funds. With respect to (2), NERA contended that the proposed EV charging infrastructure would not meet the “prudent investment standard” typical of utility investments: the Proposal would put ratepayers at risk of stranded capital if the proposed EV charging technologies became obsolete (a likely outcome in an emerging technology industry). With respect to (3), in response to National Grid’s contention that incremental load and revenue from EV adoption would eventually put “downward pressure” on distribution rate, NERA concluded that the opposite was likely depending on when EV owners chose to charge their vehicles. With respect to (4), NERA concluded that National Grid’s PBR proposal to earn up to $12 million in rewards for faster-than-expected EV adoption and cheaper-than-expected EV charger deployment did not conform to PBR standards established by the DPU in 1994, and that the reward could change considerably based on subjective inputs.

On 30 September 2019, the DPU concluded that most of the components of the Proposal were not in the public interest, did not meet a need regarding the advancement of EVs in Massachusetts that is not likely to be met by the competitive EV charging market, and could hinder the development of the competitive EV charging market. The DPU disallowed components of the Proposal totaling $145 million as well as National Grid’s PBR proposal related to EV adoption and EV charger deployment.

The DPU approved the components of the Proposal related to a residential off-peak charging rebate, a fleet advisory service plan, and an R&D plan, totaling $22 million.