Mass. attorney general requests DPU reject National Grid $104M rate hike

BOSTON –Attorney General Martha Coakley will request that the Department of Public Utilities reject National Grid’s $104 million rate hike request for its three local gas distribution subsidiaries, her office said in a news release.
The proposed hike would be the largest gas-distribution rate increase in the Bay State’s history, if approved. The DPU is expected to rule on National Grid’s request by Nov. 1.
Coakley also reiterated her request for a full audit of National Grid expenses, which could “lead to further cost reductions.” In a filing with the DPU in August, the attorney general identified inappropriate National Grid employee-reimbursement expenses which led the company to agree to remove $1.5 million from its cost of service.
“National Grid has removed many of the inappropriate expenses that we uncovered in our review, but those costs only scratch the surface,” said Coakley. “We believe that National Grid has attempted to pass on millions [of dollars] in unnecessary costs to Massachusetts consumers and businesses.”
Some of the expenses identified by the attorney general’s office included a shipment of wine from Great Britain to the United States, tuition-fee reimbursement for a National Grid executive’s children to attend an exclusive British private school and the costs for company executives to attend the presidential inauguration.
Coakley suggests that a full audit may reveal $100 million in costs that should have been allocated to National Grid’s New York, New Hampshire and Rhode Island subsidiaries.
In Massachusetts, National Grid operates three gas distribution subsidiaries: Boston Gas Company, Essex Gas Company and Colonial Gas Company.
Coakley said that National Grid is attempting to break a 10-year rate plan with its Boston Gas Company subsidiary customers, approved by the DPU in 2003, by requesting to increase its rates by $75 million.
“Breaking that plan early would take away $350 million in financial benefits that were supposed to have accrued to customers and instead would cost them an average of $580 per customer between now and 2013,” said Coakley’s office.
The rate-hike request for Essex Gas Company stands at $3 million and Colonial Gas Company customers come to over $26 million.
Additionally, Coakley criticized National Grid’s “pattern of deferring maintenance” and its 11.3 percent return to shareholders, compared the attorney general’s proposed 9 percent return.
National Grid provides gas distribution service to over 850,000 residential, commercial and industrial customers in Massachusetts and is the second-largest utility in the United States.