Nov. 9—ALBANY — With winter on the way amid a major spike in natural gas prices, and fears of inflation taking hold amid the continuing pandemic, a leading utility consumer advocacy group based in Albany is opposing electric and gas delivery rate increases that National Grid wants to pass onto its upstate residential customers starting in January.
Back in September, National Grid and state utility regulators announced they had negotiated a three-year, $328 million increase to the company's upstate gas and electric rates.
The proposal, which requires approval by the seven-person state Public Service Commission by next month in order to take effect by Jan. 1, will cost the average National Grid residential customer an extra $150 out of their pockets over the next three years.
That's just too steep an increase given that home heating bills are already expected to spike more than 30 percent this winter, says the Public Utility Law Project of New York, or PULP, a legal services nonprofit that advocates on behalf of consumers and the poor in rate cases before the PSC.
"Given the continuing financial crisis wrought upon New York by COVID-19, the additional stressors of the price increases due to supply chain disruption, and the increase in the costs of natural gas... the commission should not approve this joint proposal submitted by the signatories for this utility service territory without additional reduction of the requested rate increases," PULP wrote in an Oct. 21 filing with the PSC.
Wholesale natural gas prices have doubled from a year ago amid rising demand as the economy rebounds from the COVID-19 pandemic.
Like electric bills, natural gas bills are made up of two main charges — the supply charge and the delivery charge.
The supply charge is variable, depending on the wholesale price of either electricity or gas, and National Grid has little control over that cost and does not make a profit off of it. It is these supply charges that are trending up now and expected to spike bills this winter.
The other charge on the bill is for the "delivery" of the electricity or gas, essentially the money that National Grid is authorized to charge customers to cover their costs, along with a reasonable profit. That delivery charge is fixed and is set through the PSC rate-making process currently under way.
National Grid estimates that if the new rate plan is approved by the PSC, the average residential electric bill would go up $1.88 a month starting in January, while gas bills would increase $1.51, not including any spikes in wholesale natural gas prices.
National Grid and staff at the PSC, which gets input from stakeholders such as PULP and business and environmental groups as they craft rates, have to balance bill affordability for consumers and businesses with the need to maintain and replace aging infrastructure, which costs money.
In a Nov. 5 filing with the PSC, National Grid said in response to PULP that it made as many concessions as it could on bills, and that credit-rating agencies had recently downgraded its long-term debt from its upstate New York operations in anticipation of lower-than-desired revenues that the rate agreements lock in for the next three years.
"The company will face a considerable challenge in maintaining its financial integrity and continuing to maintain and attract credit on favorable terms during the term of the rate plans," the National Grid filing states.
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