National Grid: Pact with state won't lead to significant hikes over prior rate requests

State-mandated steps National Grid must take to satisfy gas demand this winter will not “materially” impact customer bills or boost its spring rate-hike request "significantly" above a previously requested $8.39 a month, the company said Tuesday.

National Grid earlier this year asked the state to approve a $60 million rate hike that would work out to a $8.39 increase for average monthly residential bills starting in April. The request has yet to be approved by the Public Service Commission.

At that time, the company warned that if it did not receive approval for a controversial $1 billion gas pipeline in 2019, rates could be 1% to 2% higher — over and above the $8.39.

But this week, National Grid appeared to back down from that assertion in interviews with Newsday this week.

National Grid spokesman Domenick Graziani said the additional 1-2% hike was based on the possibility the downstate moratorium would still be in place and the company would not be adding new customers during the next two winters. But after Gov. Andrew M. Cuomo's threat to revoke its license, prompting an agreement for National Grid to lift the moratorium, the company may no longer need the additional 1 to 2%.

The original assumption of hooking up no new customers "is no longer the case given the recent agreement,” Graziani said. Accordingly, the company will update the 2020 rate request filed with the Public Service Commission “to reflect recent events, including the agreement to connect new customers over the next two winters," he said.

The state agreement, he added, “will not have a significant impact on our revenue requirement as compared to the original filing because the original assumed we would be adding new customers.”

Asked if that meant the company won't seek to hike bills beyond the $8.39, Graziani said, "It’s too early to say what the potential bill impact will be, but we do expect it to not be materially changed for our customers when compared to our original filing.

As part of its agreement with the state, the utility will pay $36 million in fines to compensate those impacted by the moratorium and to fund programs to encourage demand reduction and green energy initiatives. National Grid shareholders, not ratepayers, will cover those costs, the company said.

But what about the costs to truck in additional natural gas supplies for the winter and the newly discovered availability on the Iroquois natural gas pipeline that runs from Canada to Commack outlined in the state agreement?

Graziani said costs of the short-term supply solutions “will largely depend on the extent they are required to meet peak demand in the winter.”

In any case, he said, “We don’t expect these short-term solutions will materially increase supply costs as compared to other options.”

PSC spokesman James Denn decline to discuss the rate request but noted gas supplies the company procures to meet additional demand this winter “from lifting the moratorium will be treated the same as all gas supply costs, though customers who take advantage of energy efficiency offerings could see lower bills.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.