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National Grid trims its rate hike proposal a bit – to 11 percent

National Grid is trimming the size of the rate hike it wants to take effect next year, but the revised proposal still would increase an average residential customer's bill by 11 percent.

National Grid's scaled-back proposal would add $8.93 to the monthly bill of an average residential customer who uses 600 kilowatt-hours of electricity. That's down from the $11.23 monthly increase in its original proposal.

The difference between the two proposals mainly stem from revised estimates that lowered the company's expected pension expenses and costs for other benefits for its retired employees. Some of the reduction in estimated expenses is the result of the company using lower interest rates in its calculation of future costs.

The latest rate increase proposal would reduce the size of the rate increase National Grid is seeking from its electric and natural gas utility operations by $76 million, or nearly 19 percent, said Stephen Brady, a National Grid spokesman.

National Grid originally asked for a rate increase that would increase its anticipated revenues by $407 million. The revised rate proposal would reduce that to $331 million, Brady said.

But the rate increase is far from a done deal. The state Public Service Commission will decide on National Grid's request after a process that is expected to last into early next year, and it has the authority to increase or decrease the proposed rate increase. The earliest that new delivery rates would take effect is April 1, 2018.

Comments on the proposed rate increase from the PSC staff and other interested parties are due on Aug. 25, which should give the company a better idea about the concerns and issues surrounding National Grid's proposal, said Pam Echenique, the utility's director New York pricing.

National Grid said its 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.

National Grid, in the latest rate filing, has proposed spending another $2.7 billion over the next three years for additional upgrades to its electricity and natural gas delivery systems, including improvements to help the utility respond to outages and damage caused by storms.

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 is covered by the company's rate proposal. Electric delivery rates would rise by 17.5 percent under the revised proposal.

While National Grid's rate filing would cover only one year, the company said it hopes to reach an agreement with state regulators that would cover several years and allow it to spread the increased costs over a longer period of time. A three-year rate agreement, for instance, could reduce the increase to less than 5 percent annually, the company said.

"We are still very interested in a multi-year agreement," Brady said.

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