National Grid seeks delivery rate hike

National Grid could raise the delivery charges for ratepayers for three years if the Public Service Commission approves a new rate plan.

But the utility submitted a plan that would lower another charge and, it said, keep the charges at the same rate they are now for most rate-payers.

"Our current rate plan, which was a 10-year plan, will end in 2011, so it is getting close to time anyway," National Grid spokesman Stephen F. Brady said. "And the current plan does not allow us to completely recover the cost we're seeing today to operate the business."

Storms in recent years have added extraordinary expenses and costs for infrastructure upgrades have also increased, he said. The new rate plan would allow the utility to raise about $390 million in additional charges each year for three years.

Customers pay charges both on the price for the electricity and the delivery charges for the utility that provides them with power. The delivery charges are broken into the basic service charge that is a flat charge and volume-based charge.

In National Grid's filings with the PSC, the utility has asked to increase the per-kilowatt hour charge about 16 percent, from 4.5 cents to 5.2 cents. To balance the increase, the utility asked to extend the number of years customers will pay the competitive transition charges, which covers losses from Niagara Mohawk ending contracts with independent power plants and selling nuclear power plants, for three more years, through 2014. The charge would decrease from 1.1 cents per kilowatt hour to 0.2 cents per kilowatt hour, about 82 percent.

"The net effect is that there will be very little bill impact," Mr. Brady said.

The changes will affect both residential and commercial customers. Some commercial customers have special contracts. The low-income assistance program will have higher assistance levels, Mr. Brady said.

The Public Service Commission has begun the process of considering the rate changes. The commission will have public hearings in the region served by National Grid and will accept public comment at any time.

National Grid, like other public utilities, is also dealing with decreased demand for electricity.

"The motion is not directly related to lower demand for electricity," Mr. Brady said. "I suspect all utilities in the state, and probably in the country, are experiencing lower demand."

Across the state, the average daily demand in 2009 was the lowest since 2003, according to a report from the New York Independent System Operator, which operates the wholesale grid. The operator also said Thursday the average annual price of wholesale electric energy was the lowest in NYISO's 10-year history. NYISO is an industry-created agency that has administered the market and its prices since deregulation in 1999.

Daily electricity usage fell from an average of 452 gigawatt-hours per day in 2008 to 435 gigawatt-hours per day in 2009.

The wholesale electric price in the state was $48.63 per megawatt-hour in 2009. The 2009 average was below the previous low of $49.90 per megawatt-hour set in 2002 and 49 percent below the 2008 average of $95.31 per megawatt-hour.

The operator credited low natural gas prices, a slower economy, energy conservation programs and an unseasonably cool summer with the lower demand and price for electricity.

"New York's competitive markets motivate power producers to pass their cost savings onto the market," NYISO President and Chief Executive Officer Stephen G. Whitley said. "The results speak for themselves, as cost savings from lower natural gas prices and reduced demand for electricity translate into lower wholesale electric energy prices."

Power plants fueled by natural gas or dual-fuel units that use natural gas or oil provide two-thirds of the electric generating capacity in the state, NYISO said. The average annual cost of natural gas was $4.87 per million British thermal units in 2009, less than half the charge of $10.13 per million Btu in 2008.

ON THE NET

National Grid: www.nationalgridus.com

Public Service Commission: www.dps.state.ny.us