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Natural gas price rise strains promised Grid bill increase

Jack McCloy of Baldwin stands near his gas

Jack McCloy of Baldwin stands near his gas meter with his latest National Grid bill, Thursday, March 16, 2016. Credit: Steve Pfost

A recent rise in natural gas prices on top of a state-approved rate hike this year is already challenging National Grid’s plan to keep bill increases to 5.5 percent this year.

National Grid in December won state Public Service Commission approval to increase the delivery portion of bills over three years to raise a cumulative $405.3 million in new revenue. Under the three-year plan, the utility will collect $185.98 million in additional rates this year, $140.16 million next year and $79.18 million more in 2019.

The plan’s projection of an average 5 percent overall bill impact on consumers was partly premised on a decline in natural gas prices over each of the next three years.

But already this year, National Grid’s charge for gas, called “supply” on customer bills, has jumped 61 percent from December. For typical customers who use around 80 units of natural gas, known as therms, the supply part of their bills increased to about $38 from $24 in December.

Asked if the rate plan made allowances for rising natural gas prices, National Grid spokeswoman Karen Young noted that gas prices remain at a “14-year low and are forecasted to remain low for a while.”

She said the forecast in the rate filing was “our best forecast of the cost of gas at the time of the filing.” But the recent increase reflects only a portion of a price curve that is expected to level out over the year.

“During the heating season, December to March, that will fluctuate,” she said of gas costs. “But if you look at the total year, the 2017 bill impact for a typical [Long Island] heating customer using 1,000 therms on an annual basis would be $6.24 per month or 5.5 percent of the total bill.”

But the cost of gas is only half the story. The PSC rate plan permitted National Grid to hike delivery rates by a scheduled 9.4 percent this year, and 7 percent in each of the next two years.

Within that delivery rate, the cost for residential gas-heating customers who use between three and 47 units of gas jumped to $1.068 per unit, from $0.8739 last year — a 22 percent increase. The cost for 50 or more therms also jumped to $0.20444 from $0.20 a unit, also a 22 percent jump. For customers who buy 80 therms, National Grid estimates delivery charges would increase $7.15 a month.

“It’s a significant jump that not that many people expected,” said Baldwin ratepayer John McCloy, 66, who calculated that his bill saw a 12 percent delivery-rate increase between December and March.

While acknowledging the 22 percent increases, National Grid noted that the overall delivery rate is moderated by other factors, which reduce the effective delivery-rate increase to 9.4 percent this year and just over 7 percent in the next two years.

McCloy sees it differently. “When you dance around the different terms, people get that glazed-over look in their eye,” said McCloy, who said he plans to run for a seat on the Nassau Legislature. “22 percent is 22 percent. The numbers don’t lie.”

National Grid said the increases are needed to help remove and replace old leaking gas lines, build a new Long Island customer center, and shore up its profits after operating without an increase for a decade.


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