Eversource Energy is Powered by Change

When Neven Rabadjija was recruited to join Boston Edison Company (now part of Eversource Energy), in 1990, the perception in the legal profession was that the electric utility industry was staid and provided uninteresting work for lawyers. “My colleagues at Hale and Dorr [a Boston law firm] said ‘you are going to be bored there,’” Neven recalls.

They didn’t know that deregulation of the industry was about to unleash decades of dynamic activity, leaving plenty of challenging work for attorneys. Neven didn’t foresee the sweeping changes to come, either. He wanted to jump from private practice to the corporate world because a deep recession had practically halted Boston real estate development, which had composed the bulk of his work. He was also looking for a better work-life balance so that he could spend more time with his young daughters. So, he made the switch—and has never regretted it.

The move placed him at ground zero of a drastic transformation of an industry that had previously been considered so stable that its stocks were recommended to those who wanted nonvolatile, secure investment performance. In the twenty-five years since, as the sector has undergone profound change, Neven, now deputy general counsel for Eversource, has been intimately involved with major corporate mergers and divestitures, the dismantling of vertically integrated monopolies by the separation of power generation from transmission and distribution services, forays into new, unregulated lines of business, regulatory reform, and the emergence of distributed, renewable-energy generation. His work has been anything but boring.

The shift began in the early 1990s, when the Commonwealth of Massachusetts started to lay the groundwork to deregulate the electric power industry by allowing non-utility-owned generation. Boston Edison wanted to participate through an unregulated affiliate, so one of Neven’s earliest assignments was a complex deal that established a new, nonregulated company to construct and operate a new generating plant in Weymouth, Massachusetts. The project involved multiple contracts, leases, and financial arrangements for the construction and operation of the power plant. “Ultimately, the deal did not go through, but it laid the corporate and regulatory groundwork for nonregulated utility affiliates,” Neven says.

The restructuring process continued with the separation of generation from transmission and retail functions. Utilities could buy and resell power while other businesses focused on generation. Boston Edison thus had to divest its generation business through a complex auction process, and Neven was one of the leading transaction attorneys involved in the sale of multiple power plants across the state.

Neven was also Boston Edison’s lead corporate transactional attorney on another groundbreaking deal in the 1990s: the auction of the Pilgrim Nuclear Power Station, in Plymouth, Massachusetts. It was the first sale involving the transfer of an operating US nuclear power plant, and there was no contract template for such a deal, so novel issues such as liability for ultimate decommissioning and nuclear waste storage and disposal had to be negotiated with the buyer, the regulators, and other stakeholders.

As the Bay State underwent full-scale electric-utility deregulation in 1997, utilities and investors were concerned about losing market share to new, independent competitors. In response, many tried to diversify their businesses by adding new, unregulated services. Neven had a hand in deals involving a proposed network of electric-vehicle charging stations, a company for the purification of drinking water through ozonation, and various energy-efficiency projects, including one that created ice during off-peak hours at night to cool water for air-conditioning in the daytime. Work on these unusual deals broadened Neven’s skill set, but few of them panned out for his company. “Some of these initiatives, such as electric vehicle charging stations, were not ready for prime time in the nineties, but we sure are deploying them now,” Neven says.

A notable exception, a partnership with RCN to build a fiber-optic network using the utility’s network of poles and conduits in metro Boston, was a financial success. The venture created a competitor to Cablevision, the established local cable TV provider, which battled the partnership in court and on the regulatory front for several years. Neven’s work on the venture opened up a new world of telecommunications law for him, and his acquired knowledge of utility regulations from this and other ventures has paid dividends in subsequent years.

In the early 2000s, a wave of utility mergers occurred in New England. Boston Edison merged with Commonwealth Energy, an electric and natural gas utility, creating a new company called NSTAR. The deal was the first corporate merger of Neven’s career, and he was heavily involved in due-diligence and transactional aspects of the deal. The work prepared him for a later merger in 2012 with Northeast Utilities, an electric and gas utility company based in Connecticut and New Hampshire, which created what is today Eversource Energy.

For many utilities, deregulation has shifted how they charge customers for their services. For electric companies that have implemented so-called “revenue-decoupling mechanisms,” revenue is no longer linked directly to the volume of power that they sell. Instead, regulators periodically review the utilities’ costs of providing service, in the context of a base-rate proceeding, to establish a revenue requirement to provide service. Based on that amount, rates are then calculated for various customer classes. Revenue decoupling thus serves as a mechanism between base-rate proceedings to adjust the level of revenues, independent of actual sales volumes per year. This approach is intended to remove the historical disincentive for utilities to promote energy efficiency, distributed and renewable generation, and other programs that would otherwise affect the utilities’ bottom lines. For utility attorneys, the rate-setting process requires a thorough understanding of regulatory policies so that they can present an accurate, persuasive case for an optimal rate structure.

Neven’s job also requires him to work with a number of external partners, and they’ve been impressed with his adaptability in the face of industry change. “Working with Neven over the last twenty-five years has been a privilege,” David S. Rosenzweig, a partner at Keegan Werlin LLP. “He is a highly skilled attorney and a demonstrated leader in navigating the ever-changing regulatory environment and challenges affecting his clients’ interests.”

Today, the dynamic, innovative utility industry bears little resemblance to the slow-moving, unadventurous one Neven joined many years ago. In recent years, he has been active in ventures and transactions involving renewable- and alternative-energy sources. Solar and wind power are ascendant and have prompted even more new regulatory issues, including how to construct and pay for transmission needed to support smaller, geographically dispersed power generators. The next frontier is offshore wind generation, which will bring yet more change to the way the utility industry operates. The changes have pushed Neven to keep learning, but he wouldn’t have it any other way.