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National Grid proposes delivery rate increases

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National Grid has submitted a proposal to the state Public Service Commission that would increase delivery rates for electricity and natural gas, a plan that the utility says would keep rates stable into 2014.

To take effect April 1, 2013, an increase of $131 million for the electric delivery rate is proposed under the plan, along with a $40 million increase for the natural gas rate. Approval of the plan is contingent upon an 11-month vetting process conducted by the PSC, allowing both parties and the public time to review it.

Despite the proposed electric-rate increase, the electric bill for the average household is expected to decrease by about 2.1 percent — roughly $1.74 per month — starting next April.

That decrease will be made possible because customers are paying an additional surcharge on their bills this year, which took effect in January. In addition to its normal base delivery fee, the provider is recouping an extra $190 million this year from its 1.6 million electric customers — revenue that will be added to its coffers for 2013. That money will offset the proposed $131 million increase, resulting in a lower charge for customers.

The $190 million collected from customers this year will reimburse the utility for various expenses in “deferral accounts” that it paid for over the past decade without charging customers, spokesman Stephen F. Brady said. These include major unexpected expenses caused by storms, for example, and other customer, personnel and infrastructure costs that have accumulated over time.

“We’re timing (this proposal) so that we can apply the revenue we collect this year so that there will be no impact on customer bills,” Mr. Brady said of the plan. “The costs of doing business at National Grid are going up, and that’s why we’re asking for this increase.”

Despite the $190 million increase this year, customers’ bills will fall by about 11 percent on average, saving them roughly $7 a month. That’s because in 2011 the utility stopped recouping special charges from customers dateing back to when it became degregulated in the 1990s, Mr. Brady said. From 2008 to 2011, the utility collected a total of $573 million in outstanding special charges from its customers. Customers made those payments incrementally from 2001 to 2010.

“We transitioned from a utility model where we owned everything to the competitive marketplace, and there were a lot of costs that went into that,” Mr. Brady said.

Customers would see a decrease only in delivery rates under the plan, which account for the electricity and gas delivered by National Grid; the actual cost of the energy delivered will vary based on market prices.

The rate delivery increase for natural gas is roughly $40 million under the plan — to be offset by about $29 million in reimbursements collected by the utility this year — and will result in a slight increase of 2.7 percent on the average customer’s gas bill, about $1.88 per month. National Grid serves 600,000 gas customers in New York state.

Mr. Brady said that revenue will enable National Grid to launch economic development programs that will expand service to areas in upstate New York that don’t have access to natural gas. Programs also will provide assistance to businesses that are considering converting from other heating sources to natural gas.

“We’re going to look at whether it’s economically feasible to extend the existing gas network to locations with no gas,” he said.

The last time the company adjusted the natural gas delivery rate was in 2010, when rates increased by 5 percent.

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