National Grid’s proposed 17.5 percent increase in residential electricity delivery charges highlighted vastly different views within the Buffalo Niagara region over utility costs.
Business representatives speaking at a hearing on the rate hike proposal on Tuesday supported the increase because it includes $2.7 billion in investment to upgrade the utility’s electricity and natural gas delivery system across upstate New York.
But residents opposed the proposed increase, which would add nearly $9 to a residential customer’s average monthly bill, saying it would deliver a big economic blow to upstate’s poorer residents and its small businesses.
“We can’t afford it,” Buffalo resident Colleen Kristich, one of a dozen people who spoke during a hearing conducted by the state Public Service Commission in the Central Library on Tuesday afternoon. An evening session was expected to attract a larger crowd of residential customers.
Representatives for the region’s major business groups supported the National Grid rate increase because the investment in new transmission and delivery systems would make the Buffalo Niagara electric system more reliable and help it support growth in areas like the Buffalo Niagara Medical Campus.
“Without reliable and adequate electric infrastructure, prospects looking to expand in Western New York will look elsewhere,” said Thomas Kucharski, the president and CEO of Invest Buffalo Niagara, the region’s business development and marketing group.
Matthew Enstice, the CEO of the fast-growing Buffalo Niagara Medical Campus, praised National Grid for its support of pilot projects to develop a more self-sufficient microgrid on the campus to help protect it from power outages, as well as a pilot program to install rooftop solar on 100 homes in the nearby Fruit Belt neighborhood.
“National Grid has shown a way to think differently about investing in new technologies,” he said.
Residents, however, said the increase was simply too much.
Buffalo resident Robert Jahnke, who is behind on his own electric bills, said if businesses see the infrastructure investment as being so important, they should be willing to pay a bigger share of the proposed rate increase.
“They’re all for the rate increase because of the upgrade,” he said. “If they’re going to be benefitting, why isn’t the rate increase being pushed on them instead of the residential people?”
The proposed rate increase would increase delivery charges on residential customers by 17.5 percent. Delivery rates would rise by 16.1 percent for small commercial customers, while big industrial users would see a 12.3 percent increase in delivery charges.
The overall impact on a residential customer’s total bill would be about 11 percent, once the actual cost of electricity that a consumer uses is added in. Electric bills are made up of two components: the cost of delivering the electricity, which is what is covered by the rate increase request, and the cost of the electricity, which National Grid passes on to customers at cost. Delivery charges account for more than half of a typical customer’s monthly bill.
“Consumers need a break, not another increase to their utility bill,” said William Szewc, a Buffalo resident and an AARP member who spoke on behalf of the organization.
Szewc also criticized a proposal included in the rate hike request that would install “smart meters” at every customer’s home to monitor consumption patterns and potentially help consumers reduce their electricity use.
With a $400 million price tag, Szewc said the smart meter program costs too much.
“Smart meters should be installed through a pilot program to determine the benefits to the ratepayer and the broader community, rather than rushing to install a meter in every house and have ratepayers foot the bill,” he said.
National Grid’s electricity delivery prices – the portion of the bill controlled by the utility – are lower than they were in 2004 when adjusted for inflation, the company said. The utility said that since 2008, it has increased its annual capital investment in its electricity networks by 70 percent.
National Grid said the infrastructure improvements include upgrades to help the utility respond to outages and damage caused by storms. Those upgrades would lead to the creation of 280 new jobs across its upstate service territory over a three-year period.
The rate increase is far from a done deal.
The PSC will decide on National Grid’s request after a review 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.
While National Grid’s rate filing would cover only one year, company officials have said they hope 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.
Rev. Kurk Laubenstein, the executive director of the Coalition of Economic Justice, said the proposed rate increase would be too much for low-income residents to bear.
“All these business concerns can afford a couple of extra bucks,” he said. “How is this going to affect the average, every day person? It’s going to be brutal.”