Boston Gas Company Rate Application Includes Productivity and Cost Benchmarking Testimony by CA Energy Consulting Experts
Categories: Performance-Based Ratemaking, Rate Design
January 16, 2026 - Nicholas Crowley and Dan McLeod
Nicholas Crowley and Dr. Daniel McLeod filed expert testimony regarding Total Factor Productivity and Cost Benchmarking on behalf of Boston Gas Company (d/b/a National Grid) in Docket D.P.U. 26-50. The testimony evaluated the elements of the Company’s proposed second-generation Performance-Based Regulation (PBR) framework and calibrated the parameters of the Company’s revenue cap formula.
Mr. Crowley and Dr. McLeod supported the Company’s proposed five-year term for the PBR plan, arguing that it aligns with Massachusetts precedent and provides a streamlined regulatory process that reduces administrative costs while balancing the risks associated with extended rate stay-out periods. The revenue cap formula adjusts the Company’s allowed revenue each year by an inflation measure (Gross Domestic Product Price Index, GDP-PI) and an empirically calculated productivity offset, known as the X factor. Based on a 15-year study (2009–2023) of 31 Northeast gas distribution utilities, the witnesses calculated an average industry productivity growth rate of -0.76%, resulting in a recommended X factor of -1.36%.
To determine the appropriate consumer dividend (or stretch factor), the testimony presents unit cost and econometric benchmarking studies that compare Boston Gas to national and regional peers. The findings reveal that the Company’s operational cost control improved after transitioning to its current PBR plan in 2021; for instance, its unit operations and maintenance (O&M) cost shifted from 25.5% above the Northeast average to 7.4% below the Northeast average. Notably, Boston Gas has excluded a customer growth factor from its total revenue cap formula to align with state greenhouse gas policies, which introduces an implicit stretch factor that forces the Company to find additional efficiencies to offset incremental growth costs.
The report can be accessed here.
UPDATE: Mr. Crowley and Dr. McLeod filed rebuttal testimony on June 17, 2026, responding to comments by stakeholders to the proceeding. The rebuttal testimony clarifies the meaning of an X factor calibrated using industry data, stating that it adjusts the company’s allowed revenue by the expected change in required revenue across peer companies during the PBR term. In addition, the rebuttal testimony re-affirms Bost Gas Company’s cost improvements relative to other companies in the gas distribution sector.