National Grid USA reached a settlement with more than a dozen parties that will see a $48.1 million rate hike phased in for gas and electricity customers in Rhode Island over the coming three years.
Under the settlement, distribution rates will increase $31.3 million and $16.8 million for National Grid subsidiary Narragansett Electric Co.'s Rhode Island electric and gas customers, respectively, from 2018 to 2021. The first phase of the hike will go into effect Sept. 1.
Following weeks of discussion with the state Division of Public Utilities and Carriers, or DPUC, and others, National Grid filed the settlement June 6 in rate cases pending with the Rhode Island Public Utilities Commission (Docket Nos. 4770 and 4780). In addition to setting base distribution rates, the settlement agreement institutes a "power sector transformation vision and implementation plan" aimed at modernizing the electric distribution system and enabling technologies that cut emissions and energy costs.
National Grid said in a statement that the settlement "fully reflects" the benefits of federal corporate income tax reform and provides a "reasonable outcome" for the utility and its customers. "Not only does it address those key priorities raised by the public and interested parties during the review process, but it also reflects the shared energy goals we have with the state."
The rate hikes outlined in the settlement include cost recovery for authorized initiatives under the power-sector transformation plan. Overall, the settlement provides that $11.3 million of the proposed electric rate increase and $2.5 million of the proposed gas rate increase would go toward funding those initiatives.
The settlement's proposed electric and gas rate increases are premised upon a 9.275% ROE. Specifically, electric rates under the deal would increase by $19.4 million in the first year, followed by an incremental $8 million hike in September 2019 and an incremental $3.9 million rise in September 2020. Gas rates would increase by $6.9 million in the first year and rise incrementally by about $6 million in the second year and $3.9 million in the third year.
Clean energy advocacy group Acadia Center praised the settlement, saying in a statement that it will save ratepayers more than $40 million in base rates over National Grid's original requested hike and noting that it includes a 25% to 30% energy bill discount for low-income customers.
National Grid kicked off the rate proceedings in November 2017 by requesting $41.3 million electric and $30.3 million gas rate increases that were premised upon a 10.1% ROE. That request spurred angry lawmakers to call for an investigation into the business practices of National Grid.
Responding to a discovery request, National Grid subsequently filed revised rate schedules of $27.4 million for electricity and $18.4 million for gas to reflect the lowering of the federal corporate income tax from 35% to 21%. The DPUC on April 6 recommended an $8.9 million rate increase for the utility's electric operations, premised upon an 8.5% ROE. For the company's gas operations, the DPUC recommended a $2.4 million rate increase, premised upon a 9% ROE.
A decision by the Rhode Island Public Utilities Commission is expected in August.
