National Grid Proposes 2.6 Percent Rate Increase

November 26, 2018
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National Grid filed a request with the state late last week to increase electric rates by 2.6 percent in order to update its infrastructure.

The request to the state Department of Public Utilities (DPU) calls for an average monthly bill increase of $4.07 for a customer using 600 kilowatt-hours of electricity.

National Grid is hoping to raise rates to build energy storage projects, a five-year plan to increase infrastructure to facilitate greater access to electric vehicle charging, increase reliability and storm response, as well as to increase the low-income discount to 32 percent.

Other parts of the proposal include implementation of a performance-based ratemaking plan, more frequent tree trimming, and a grant program for customers in the 15 Gateway cities (including Everett) serviced by National Grid.

In addition to the increased costs of operating and maintaining the system, the proposal includes other costs, such as the recovery of the company’s Massachusetts property taxes – which have risen 10 percent, or $6 million, since the last rate case in 2015. In this filing, the requested net increase in distribution revenue is $70.3 million.

The proposal will undergo a thorough review process that typically lasts 10 months. If approved, the proposals would take effect Oct. 1, 2019, with new bills being issued starting  Nov.1, 2019.

National Grid’s current distribution rates reflect the cost of doing business for the year ended June 30, 2015. This proposal would update distribution rates to reflect the cost of doing business for the year ending Dec. 31, 2017.

“Our request outlines important investments that would allow the company to continue providing safe, reliable power to our 1.3 million customers,” said Marcy Reed, president of National Grid in Massachusetts. “This proposal strikes the right balance by seeking to fund programs that further the clean energy transition, provide greater assistance to income-eligible customers and reset rates with a modest bill impact.”

National Grid invested $265 million in electric infrastructure in 2016 and $306 million in 2017. The company’s projected annual investment over the next three years is approximately at the same level as 2017.

National Grid incurs costs that it has limited or no control over, such as inflation, equipment, health care expenses, and storms. In Massachusetts, distribution rates are based on actual investments in the equipment needed to distribute electricity, along with operation and maintenance costs, from a recent year.

Distribution rates represent approximately one-third of a customer’s bill. This charge covers the cost of running National Grid’s business, including the operation and maintenance costs of the poles and wires needed to distribute electricity from the beginning of the company’s distribution system to all of its 1.3 million customers.

The electricity supply rates, referred to as Basic Service rates, are adjusted twice a year for residential and small business customers in accordance with DPU rules. On Nov. 1, 2018, Basic Service rates for National Grid residential customers increased from 10.9 cents per kWh, to 13.7 cents per kWh.