National Grid is proposing a rate hike that would result in a typical residential electricity customer's monthly bill increasing 14 percent, or $11.23, next year.
It's far from a done deal – the state Public Service Commission will decide on National Grid's request after a process that is expected to take 11 months. Any increase would not take effect until April 1, 2018.
Ken Daly, National Grid's New York president, said the utility is mindful of the potential cost impact on customers, and is open to the idea of phasing in an increase over multiple years, instead of just one year. But Daly said National Grid needs to modernize its electric and gas system, to ensure the network's long-term safety and reliability.
"I think the simple message is, we're at the point in time where investments continue to be needed," Daly said in a Friday conference call.
National Grid is also proposing increases in commercial customers' monthly electricity bills as high as 13.7 percent, or $10.01, but the increases would be less for higher-volume users.
National Grid says electricity delivery prices – the portion the bill controlled by the utility – are lower than they were in 2004 when adjusted for inflation. The utility says that since 2008, it has increased its annual capital investment in its electricity networks by 70 percent.
The PSC will subject the rate request to a "rigorous" review, to "ensure National Grid's rates remain just and reasonable," said James Denn, a commission spokesman. There will be opportunities for public comment, including public hearings.
And the PSC has a history of reducing the rate increases requested by utilities, sometimes substantially. National Fuel Gas Co. in 2016 submitted a request for a 15 percent increase in delivery rates for residential customers. At the end of that process, the PSC granted a 2 percent increase.
The bills that consumers pay National Grid for their electric service are broken down into two parts. The smallest portion is for the actual cost of the electricity, which the utility passes on to consumers at cost.
The bigger portion of a typical consumer's bill is for the delivery charge, which is what National Grid has proposed increasing by 22 percent. The delivery charge covers National Grid's operating costs and the profit it is allowed to earn under its rate plan.
Along with new investments, National Grid plans to hire 280 people over the next three years, to keep up with its growth and to replace workers who are expected to retire, he said.
"They're highly skilled, highly specialized jobs," including electric line workers, substation workers and engineers, Daly said.
Daly was asked if National Grid requested a large increase in hopes of obtaining at least a modest increase at the end of its own process, but he said that was not the intent.
"We file for what we believe we need to run an electric and gas grid of this size and complexity," he said. "During the process, we may land on a different set of numbers depending on other stakeholders' input, including the regulator."
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