National Grid is proposing to shift its $356,000 annual electricity bill onto its gas customers following LIPA’s decision to end its longtime practice of providing electricity to the company for free.
In a recent filing as part of its request for a 22 percent hike in the delivery charge, National Grid has requested that the projected $356,000 annual cost for electricity at its Long Island gas facilities be covered by its 570,000 Long Island gas customers.
The company noted that LIPA previously hadn’t charged London-based National Grid for electricity.
“LIPA has since informed the company that it will be billing” National Grid for “usage at the company’s facilities,” according to the filing to the State Public Service Commission a week ago.
National Grid and its predecessor KeySpan had run the electric grid for LIPA since 1998, while concurrently running their natural gas distribution system.
Both had been owned by the former Long Island Lighting Co., which was split in 1998. LIPA got the electric grid, and KeySpan got the power plants and the gas system. National Grid bought KeySpan in 2007.
Most of the free electric service went to support National Grid’s operation of the LIPA electric grid, company spokeswoman Wendy Ladd said. The costs “are for National Grid’s Long Island facilities that previously supported LIPA under” contract, she said.
That changed in the aftermath of superstorm Sandy, and in 2014 LIPA handed the contract to operate the electric system to PSEG Long Island. National Grid was forced to split off the gas and electric parts of its business.
PSEG spokesman Jeff Weir said, “Today, just like any other commercial customer, National Grid is billed for their electric usage.”
Ladd agreed that National Grid “is now responsible for electric charges for the portion of these facilities supporting the gas business.”
The charges do not include National Grid’s power plants, which still are under contract to LIPA, Ladd said.
In any case, she said, “all costs were equitably and contractually agreed on behalf of gas and electric customers.”
Utility watchdogs say the arrangement bears scrutiny.
“Why weren’t they being charged all along?” said Doug DiCeglio, president of Utility Rate Analysis Corp., a Lynbrook utility bill-reviewing company.
Matthew Cordaro, a former LILCO executive and now a LIPA trustee, said he has long had concerns about the blending of costs between National Grid’s gas business and the electric services it performed for LIPA.
Cordaro noted that they previously shared employees, facilities and computer systems. Now that there’s a figure on National Grid’s electric costs, he urged LIPA to see if some past amounts can be recouped. “I think we should be pursuing it,” he said.
PSEG Long Island has budgeted about $2.2 million in electricity costs for its operations on LIPA’s behalf over the next three years, according to its rate-increase proposal.
PSEG operates only the electric system on Long Island, and shares many facilities, including a central office in Hicksville and some customer walk-in centers, with National Grid.
National Grid seeks to raise some $142 million a year through the rate increase, which will hike the delivery charge portion of bills by 22 percent beginning in 2017, or about $15.70 a month.
The company wants to phase in the increase over several years. It says that, if gas prices remain low, the “significant” increase could be offset by lower fuel prices, and increase bills by about 12 percent, though there is no guarantee that will happen.
Most of what National Grid seeks in the rate filing is money to remove and replace old steel pipes, which it said will require the hiring of more than 100 workers on Long Island.