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National Grid increases its rate hike request to $60M, up from $49M

National Grid says it needs lots more money

National Grid says it needs lots more money for infrastructure improvements, a move toward cleaner energy -- and profit margin. Photo Credit: Newsday/Mark Harrington

National Grid has increased to $60 million the amount it is seeking in higher rates from Long Islanders next year, saying the $8.39 average hike that residential customers would pay each month is needed for infrastructure improvements and a move toward cleaner energy.

That 8.64 percent increase could be another 1 percent to 2 percent higher, an official told attendees at a public hearing Wednesday, if National Grid doesn't receive approvals to construct a controversial gas pipeline it plans to have in service by next year's end. 

A utility watchdog countered that the increase would only worsen an affordability crisis on Long Island and called for an investigation into the company’s moratorium on new gas hookups across the region tied to the stalled pipeline.

National Grid at hearings in Mineola, Hauppauge and Riverhead this week said the rate increase it’s seeking by April of next year would add $100 to the average customer's bill over the course of the year. The 8.64 percent increase is a jump from the 6.92 percent hike the company initially announced in April, and was the result of a “sales forecast update,” said Phil DeCicco, National Grid’s vice president and deputy general counsel.

The initial April revenue request, which is recovered through increases in the delivery portion of bills, had been $49 million. Delivery makes up roughly half of bills, with the fluctuating supply portion making up most of the rest.

National Grid received state approval for rate hikes of 7 percent to 9 percent over the past three years, and the state Public Service Commission held public hearings across Long Island and New York City on Wednesday and Thursday to gauge ratepayer sentiment.

Only one speaker made comments at a hearing in Hauppauge Wednesday night. Richard Berkley, executive director of the Albany watchdog group Public Utility Law Project, said the increase  would only make things worse for Long Island households beset by high costs.

“National Grid’s gas rates are already among the highest in New York state,” he said. “The truth is, many National Grid customers are already struggling to pay their bills.” He asked the Public Service Commission to “scrutinize” the rate request to make sure National Grid rates are “just and reasonable, affordable and fair.”

DeCicco said the increase would pay for replacement of leak-prone pipe, storm hardening, enhanced safety measures and steps to increase efficiency and reduce greenhouse gas emissions. He also acknowledged the company’s “return on equity,” or profit, would increase to 9.65 percent from 9 percent under the hike. “It’s important for us to be able to shore up our financial position,” he said. 

The company plans to make $70 million in infrastructure investments during the rate year, part of a $500 million upgrade, but also must pay $25 million in increased property taxes. It has a goal of a 20 percent reduction in operating expenses and will see pension costs lowered by $18 million, DeCicco said. 

He also noted the company faces “severe gas supply constraints” because New York and New Jersey have not approved permits for partner Williams Co.'s Northeast Supply Enhancement project, a 24-mile undersea pipeline that would increase the regional gas supply by 14 percent. That’s led the company to declare a moratorium on new residential and commercial gas customers seeking uninterrupted service across the region. Critics accuse the company of fabricating the shortage to lock the region into the $1 billion pipeline’s outsize supply for decades, rather than turn to cleaner energy sources.

DeCicco, in response to questions, said the company has filed paperwork with the state  to ask for 1 percent to 2 percent extra in the rate hike if the pipeline isn’t approved. He said the state was conducting an independent review of the regional gas supply shortage, in addition to continuing environmental reviews.

Berkley called for “full investigation of the nature of this shortage and the company’s failure to do the job for which it was created.”

Under the proposed rate hike, business customers also would see higher bills.

The increase for the average commercial customer would be $29 to $33 monthly under the proposed rates.

National Grid has more than 600,000 Long Island customers, and 8,000 miles of pipeline here.

Around a dozen attendees at the Riverhead session on Thursday didn't weigh in specifically on the rate plan. Those who spoke generally expressed support for National Grid community programs, including grants for affordable housing, said Gwen O'Shea, president of Community Development Corp. of Long Island.

Suffolk Leg. Al Krupski (D-Cutchogue) said after the meeting that he had questions about whether National Grid's pipeline plan conflicts with Gov. Andrew M. Cuomo's goal "to really push renewables. If you put in this pipeline is it going to push that off? Or is demand so great that you need both to make that transition?" He said he's meeting with National Grid next week to get answers. 

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