Company Requests Update to Distribution Rates & Investments in Clean Energy Technologies
WALTHAM, MA – Continuing its commitment to meet the evolving energy needs of its 1.3 million Massachusetts customers, today National Grid filed a request with the Massachusetts Department of Public Utilities (DPU) to update its electric distribution rates and make significant investments in emerging clean energy technologies.
In its proposal, the company outlines investments in reliability and storm response, energy storage projects that contribute to grid flexibility, and infrastructure to facilitate greater access to electric vehicle charging, as well as an increase in the low income discount and a new rate structure that introduces predictability in what National Grid will charge for distribution service.
The company’s proposal requests approval to set new distribution rates that would add approximately 2.6 percent, or $4.07, to the monthly bill of a typical residential customer using 600 kilowatt-hours of electricity. To ensure the company invests, operates, and maintains its distribution system wisely, the proposal will undergo a thorough review process that typically lasts 10 months. If approved, the proposals would take effect October 1, 2019, with new bills being issued starting November 1, 2019.
Some highlights of the filing include:
- Continuation of current levels of electric infrastructure investment.
- Implementation of a performance-based ratemaking plan
- A five-year program to increase electric vehicle charging availability
- Up to 14 megawatts / 56 megawatt hours of energy storage projects
- A more frequent tree trimming cycle
- Increasing the low income discount to 32 percent
- A grant program that reimburses eligible customers undertaking electric distribution upgrades in 15 Gateway cities served by National Grid.
“Our request outlines important investments that would allow the company to continue providing safe, reliable power to our 1.3 million customers,” said Marcy Reed, president of National Grid in Massachusetts. “This proposal strikes the right balance by seeking to fund programs that further the clean energy transition, provide greater assistance to income-eligible customers and reset rates with a modest bill impact.”
National Grid invested $265 million in electric infrastructure in 2016 and $306 million in 2017. The company’s projected annual investment over the next three years is approximately at the same level as 2017.
National Grid incurs costs that it has limited or no control over, such as inflation, equipment, health care expenses, and storms. In Massachusetts, distribution rates are based on actual investments in the equipment needed to distribute electricity, along with operation and maintenance costs, from a recent year.
National Grid’s current distribution rates reflect the cost of doing business for the year ended June 30, 2015. This proposal would update distribution rates to reflect the cost of doing business for the year ending December 31, 2017.
Distribution rates represent approximately one-third of a customer’s bill. This charge covers the cost of running National Grid’s business, including the operation and maintenance costs of the poles and wires needed to distribute electricity from the beginning of the company’s distribution system to all of its 1.3 million customers.
In addition to the increased costs of operating and maintaining the system, the proposal includes other costs, such as the recovery of the company’s Massachusetts property taxes – which have risen 10 percent, or $6 million, since the last rate case in 2015. In this filing, the requested net increase in distribution revenue is $70.3 million.
Distribution rates are separate and distinct from the electricity supply charges appearing in the Supplier Service section of customer bills, which, for electricity supply provided by National Grid, reflects the cost of that supply purchased in the market. The electricity supply rates, referred to as Basic Service rates, are adjusted twice a year for residential and small business customers in accordance with DPU rules. On November 1, 2018 Basic Service rates for National Grid residential customers increased from 10.9 cents per kWh to 13.7 cents per kWh.