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Big drop in electric rates seen for 2012 National Grid touts good news for upstate

National Grid customers -- especially large industrial customers -- should get some significant relief from their electric bills next year.

Residential customers could see their electric bills drop by as much as 8 percent, while small-business customers could see a drop of 11 percent.

Manufacturers and other large industrial customers, meanwhile, could see their electric bills drop by as much as 40 percent.

"We're very excited," said Kenneth Daly, president of National Grid's New York operations. "We think this is very good news for upstate customers to see their bills come down starting in January."

The decrease is tied to National Grid's rate increase approved earlier in the year by the State Public Service Commission. The PSC allowed National Grid to increase the amount it collects from customers by $119 million annually -- but structured the plan in such a way that monthly bills would not increase.

That was done by asking National Grid to delay the recovery of hundreds of millions of dollars of costs associated with storm restoration, pensions and infrastructure upgrades until next year.

That's when fees called competitive transition charges, or the CTC, are set to expire. The CTC was implemented when National Grid bought Niagara Mohawk in 2001 and was designed to ease potential volatility of utility deregulation to both the company and customers.

Even with the recovery of past costs like pension and storm and infrastructure upgrade expenses, bills will go down because the CTC was such a large number -- $544 million -- this year. When the CTC goes away, National Grid will be collecting $413 million less from customers, which accounts for the decrease in bills.

The PSC, which must approve the changes to the CTC and cost recoveries, will likely make a decision by the end of the year when the CTC is officially set to expire, although no date has been set.

Depending on the size of the business and how much electricity it uses, the monthly savings for businesses could range from $1,000 a month to more than $20,000 a month, which can have a huge impact on a company's bottom line and its ability to hire or hang onto employees.

"That should help businesses keep their costs down," Daly said.

A typical homeowner whose monthly electric bill is $125 would save roughly $9.30 starting in January.

National Grid is expected to seek another rate increase for 2013, although it is unclear what impact that might have on bills. Since a rate case before the PSC takes 11 months, it is likely that National Grid would file a new plan with the commission sometime next year, but Daly said nothing has been decided yet.

"It's still too early," Daly said.

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