WARWICK – National Grid Rhode Island has submitted a proposed settlement agreement in response to a request of the R.I. Public Utilities Commission to alter its rate modification request submitted earlier this year.
The settlement plan submitted Wednesday comes after the National Grid filed two rate requests that both resulted in state regulators proposing reductions. The negotiations are happening through a regulatory process known as a “rate case.”
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The plan has now been changed from a one-year rate plan increase to a three-year plan that will increase National Grid revenue by a collective $48.1 million by means of base rate increases. The revenue increase will be split between Narragansett Electric ($31.3 million) and Narragansett Gas ($16.8 million).
The Narragansett Electric rate increases, which would provide the company with $31.3 million in extra revenue, would net an additional $19.4 million in year one of the plan, another $8 million in year two and another $3.9 million in year three. The rate increases were further borken down into two proposals: a base rate increase to cover National Grid’s operating costs and an increase to cover the costs of a grid modernization program.
The grid modernization, which the company called the “Power Sector Transformation Vision and Implementation Plan,” would add $13.8 million in ratepayer costs that the company said will be used to, “modernize the electric distribution system and enable technologies that will reduce greenhouse gas emission and help to control costs for customers.”
The PST plan includes costs for grid modernization, an electric transportation program, an electric storage program, development of an updated advanced meter functionality business case and an electric heat program. These costs, which are included in the $48.1 million total rate increase, were submitted as $11.3 million in electricity rates and $2.5 million in gas rates over three years each.
The base rate requests without the PST program submitted in the settlement agreement would cost Rhode rate payers $34.3 million, $20 million over three years for electricity and $14.3 million for Rhode Island gas rate payers.
When the process first started in November, National Grid proposed raising rates $71.6 million per year. But after Congress passed sweeping tax reform in December, resulting in a financial boon for the utility, state regulators asked National Grid to revise its proposal.
On March 2, the utility lowered its proposal to $45.8 million for one year, which state regulators argued was still too much and proposed it be “substantially reduced.”
The new settlement proposal averages just over $16 million per year for three years. Without the proposed PST, the rate increases would average about $11.4 million each year over three years.
The rate requests were also designed to recoup losses that the energy provider incurred over the past five years.
The proposal also includes initial reductions in low–income residential rates for both gas and electricity. Electric rates were estimated to decline by 15.7 percent in the proposal for eligible electric customers while gas rates for eligible low–income residential customers were estimated to decline by 22.3 percent in the first year. In year two and three in the proposal, both electricity and gas for low–income residential customers would increase modestly when compared with the initial declines.
The company, serving about 492,000 electricity customers and 267,000 gas customers, hasn’t fully readjusted its rates since 2012.
The rate changes, if approved, would take effect on Sept. 1, 2018.
The PUC will conduct a public comment hearing on the rate case Thursday at 2:00 p.m. in Hearing Room A of the R.I. Public Utilities Commission, 89 Jefferson Blvd. in Warwick. The PUC will be conducting a final public comment hearing on June 19 at the Community College of Rhode Island, Liston Campus, at 5:30 p.m.
The Division of Public Utilities and Carriers issued a press release following the filing that said that the proposed settlement features unanimous agreement from all 13 intervenors in both rate cases.
The settlement was submitted on behalf of National Grid, DPUC and the 13 intervenors.
Chris Bergenheim is the PBN web editor.
