The proposal will be filed today with the New York Public Service Commission (PSC) and, if approved, will take effect January 2011.
National Grid operates under a rate plan that does not recover ongoing operational costs. In the new proposal, the company will file for recovery of out-of-pocket costs it will incur of more than $390 million per year over current rate levels.
To offset this, the company has proposed to delay the full recovery of previously incurred costs and instead will spread those over an additional three years through the end of 2014, resulting in little or no change in bills for majority of customers. Under the current rate plan, National Grid is eligible to collect most of those deferred costs by the end of 2011.
Tom King, president of National Grid in the US, said: “We recognize that these are difficult economic times, so we started with the premise that this proposal would have as little impact on customer bills as possible. At the same time, it is imperative that National Grid be in a financial position to continue the efforts we’ve made to support and improve our infrastructure for the benefit of customers.
“We believe this proposal will allow us to address the goals of providing safe and reliable service to customers at a reasonable cost, and help them to manage their energy bills and reduce their carbon footprint. At the same time this provides the company the financial stability to continue to invest in our networks and earn adequate returns to attract necessary capital.”
The company’s proposal would allow National Grid timely recovery of current and ongoing operations and maintenance costs, continued funding for infrastructure investment, enhancements to programs for low-income customers and continuation of upstate-specific economic development programs. The filing also includes a decoupling mechanism that will encourage continued expansion of energy efficiency programs for all customers, the company said.
Mr King said the company was able to reduce the size of its revenue request through recent austerity measures valued at more than $12m, and a productivity offset that provides an average $9m savings per year to customers over the life of the proposal.
