Bill
H 3452
The bill caps the allowed return on equity for electric and gas base rates at the four-year average of neighboring states, limiting rate increases for consumers.
Status: Referred to Committee on Judiciary; introduced Jan 14, 2025; prefiled Dec 5, 2024. Hearing held June 4, 2025; reporting date extended to Dec 3, 2025. (See “Legislative actions” below.)
Note on source material: The bill text filed as House No. 3452 in the 194th General Court is a Massachusetts measure addressing utility allowed returns on equity (ROE). The packet provided also includes an unrelated South Carolina draft concerning Sunday liquor sales; that material appears to be inserted in error and is not part of the Massachusetts utility bill summarized here.
Purpose and intent
- To limit the allowed return on equity (ROE) that the Massachusetts Department of Public Utilities (the “department”) may approve for electric and gas companies in base rate proceedings, with the goal of protecting consumers from “unreasonable” utility rate increases attributable to high ROE awards.
Key provisions
- New Section 94J is added to Chapter 164 of the General Laws.
- ROE cap: In any base rate proceeding under Section 94 for electric or gas companies, the department may not approve an allowed ROE higher than the average allowed ROE approved in neighboring states over the preceding four years.
- Waiver: The ROE cap may be waived only upon a specific showing that applying the cap would otherwise violate the constitutional rights of the electric or gas company.
- Exclusions from the ROE calculation: The determination of the allowed ROE under this section must exclude:
- Compensation related to programs under Section 21 of Chapter 25; and
- Any performance incentives designed to promote efficient, clean, and reliable operation of the electric or gas system.
- Definition: “Neighboring states” are defined as Connecticut, Rhode Island, Maine, Vermont, and New Hampshire.
Who would be affected
- Primary: Investor‑owned electric and gas utilities subject to Massachusetts base rate proceedings.
- Secondary: Massachusetts ratepayers/consumers (potential for lower rate increases if ROEs approved in MA are constrained), the Department of Public Utilities (DPU) in applying the new standard, and utilities’ investors (potentially lower authorized returns).
- Other: Regulators and stakeholders in ratemaking and performance incentive design (since certain incentive compensation is excluded from the ROE comparison).
Potential impacts and considerations
- Consumer protection: By tying allowed ROE to a regional average, the bill aims to restrain upward pressure on rates driven by ROE awards above regional norms.
- Investment and credit implications: A lower allowed ROE could reduce utilities’ revenue requirements and customer bills but might raise concerns about utilities’ ability to attract capital or maintain credit ratings — the bill allows a waiver only where constitutional rights would be violated.
- Treatment of incentives: Excluding performance incentives from the ROE determination means such incentives could still be authorized separately, but they would not be counted toward the ROE cap.
- Implementation: The DPU would need to calculate a 4‑year regional average of “allowed” ROEs in the named neighboring states for each base rate proceeding.
Procedural/timeline notes
- Prefiled: 12/05/2024
- Introduced/read first time: 01/14/2025
- Referred to Committee on Judiciary (01/14/2025); later referred to Telecommunications, Utilities and Energy (02/27/2025)
- Senate concurred: 02/27/2025
- Hearing: 06/04/2025
- Reporting date extended to: 12/03/2025
Related/previous filings
- Similar matter filed in prior session: House No. 3143 (2023–2024).
- Related docket: HD 3590 (replaces).
Compiled from official sources — confirm details with the bill’s official record.
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