National Grid seeks an additional $71M from customers

Updated: 3:10 p.m.

IN CHARGE: As president of National Grid Rhode Island, the local affiliate of National Grid PLC, which owns and operates nearly all of the state’s electrical and gas systems, Timothy F. Horan is charged with ensuring a safe and reliable system for customers, employees and the public. / PBN FILE PHOTO/RUPERT WHITELEY
IN CHARGE: As president of National Grid Rhode Island, the local affiliate of National Grid PLC, which owns and operates nearly all of the state’s electrical and gas systems, Timothy F. Horan is charged with ensuring a safe and reliable system for customers, employees and the public. / PBN FILE PHOTO/RUPERT WHITELEY

PROVIDENCE – National Grid Rhode Island is seeking an additional $71.6 million from electricity and gas customers each year to help offset increased business costs realized during the last five years.

The state’s largest utility, a subsidiary of National Grid PLC, has proposed raising the funds by increasing its “base distribution rates,” known better as delivery costs.

The company, serving about 492,000 electricity customers and 267,000 gas customers, hasn’t fully readjusted its rates since 2012.

The new rates – proposed through a regulatory process known as a “rate case” – would help offset growing costs, including property taxes, health care, labor and equipment, according to Bill Malee, vice president of regulatory and pricing at National Grid.

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“The proposal we’re putting forward really updates the pricing to reflect our current costs,” Malee said during a Monday morning briefing with reporters. “It also reflects our shared support for Rhode Island energy priorities.”

The utility would also add nearly 90 new jobs.

The $71.6 million would be spread between gas and electricity customers.

National Grid residential electricity customers would see monthly bills increase about 6 percent. For commercial and industrial users, the total would increase between 3 percent and 10 percent, depending on size and usage.

The electricity rate increases would translate into at least an additional $41.3 million each year.

On the gas side, a typical residential customer would see annual gas-heating bills increase about 5 percent. For commercial and industrial customers, annual costs would increase between 1 percent and 6 percent. The increases would add at least $30.3 million each year.

Income-eligible customers, however, would see delivery costs fall. Monthly electricity bills would decrease about 3 percent, whereas gas customers would realize a 6 percent annual decrease, according to company estimates.

Timothy F. Horan, president of National Grid, said the decreases reflect a flat-rate discount of 15 percent proposed for all income-eligible customers.

“That will be a much more transparent process than the current discount [structure],” Horan said. “It will be much more simple.”

National Grid also sees the rate case as an opportunity to support new power sector transformation initiatives advocated for by state energy officials.

Specifically, it includes support for advanced metering, modernizing the grid, electric-transportation charging infrastructure and small-scale energy storage.

The utility has proposed allocating $3.6 million in the first year – separate from the $71.6 million – to go toward some of those initiatives.

The rate case was filed with the R.I. Public Utilities Commission on Monday.

State regulators will now vet the proposal and consider public comment. Rhode Islanders are acutely aware of electricity prices, especially this year, as monthly rates increased 20 percent in October.

Gov. Gina M. Raimondo released a statement after the filing, criticizing the company for the proposed increase.

“Rhode Island families and small business owners – especially manufacturing businesses – are already challenged by high energy costs,” Raimondo said. “The Public Utility Commission needs to open up National Grid’s books and stand up for Rhode Island ratepayers.”

The regulatory process typically lasts nine months. Any changes would take effect on Sept. 1, 2018.

In 2012, during the last rate case, National Grid requested an additional $51.4 million in funds and ended up receiving $31.8 million, according to the company.

“We know rate changes and rate increases are tough for customers, but we’ve really worked hard to manage our cost over the last five-to-six years,” Horan said. “This is adding some key positions, and will allow us to be the proactive type of utility we are for Rhode Island.”

Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.