One-tenth of National Grid’s rate hike would aid customers who can’t afford a rate hike

Syracuse, N.Y. – Upstate New York residents are facing double-digit increases on their electric and gas bills if the state Public Service Commission approves a deal National Grid and PSC staff members are pushing.

Two years after the new rates start phasing in, a typical household would pay 20% more for electricity and 27% more for natural gas.

But not all customers would face harsh increases. Part of National Grid’s deal with PSC staff is to more than triple the amount of money for bill discounts provided to low-income customers.

As a result, many of the 150,000 customers in the Energy Affordability Program will see only modest bill increases. In many cases, their bills will remain flat. And National Grid has committed to enroll more than 6,000 new households a year into its low-income program.

Increased funding for discounts to EAP customers accounts for 13% of the increased electric revenue sought by the utility over the next three years and 8% of the additional natural gas revenue.

That’s one of the details buried in thousands of pages of documents filed by National Grid and other participants in the rate case. The settlement to be presented to the Public Service Commission this summer is a complex document with conflicting goals.

The rate plan aims to strengthen an aging electric and gas system that serves 1.7 million electric customers and 640,000 gas customers while also keeping energy affordable. That’s why it produces both higher bills and higher bill discounts.

New York officials are concerned that utility service is increasingly unaffordable for many households. Gov. Kathy Hochul lashed out in February at a proposal to raise rates from New York City utility Con Edison, complaining in a news release that “the cost of living is too damn high.’’

But the state’s utility regulator, the seven-member Public Service Commission, struggles to hold down the rates charged by the state’s privately owned utilities.

Over the past year PSC staff pared away more than one-third of what National Grid requested in a three-year rate proposal, but the resulting increase – which requires a majority vote of the commission to take effect — is still higher than anything National Grid has implemented in recent decades.

The proposed increases come as one customer in seven struggles to pay the bills. More than 210,000 Upstate households are at least 60 days late paying National Grid, owing more than $323 million combined.

Similar problems face other utilities. Statewide, residential customers owe nearly $1.8 billion in overdue bills, according to Public Utility Law Project, an advocate for low-income customers.

To compensate, the PSC has developed a tiered system for residential rates based on income.

According to its proposed rate deal, National Grid will devote $244 million of the electric delivery revenues it collects over the next three years to give discounts to customers in its Energy Affordability Program, up from $64 million over the past three years. Likewise, funding for natural gas discounts will increase from $18 million to $47 million.

All told, the $210 million increase in spending on EAP represents 12% of the $1.7 billion additional electric and gas revenue National Grid stands to collect over the next three years.

Since 2015, each major utility has been required by the PSC to have an Energy Affordability Program. In the rate settlement, National Grid promised to recruit more low-income households into the EAP, increasing enrollment by 4.5% a year.

That was a goal pushed during the negotiations by the environmental group Alliance for a Green Economy, or AGREE, whose research indicated that only one-third of eligible low-income customers are enrolled in National Grid’s program, said Jessica Azulay, executive director.

AGREE was among more than a dozen groups to support the settlement.

But PULP, another advocate for low-income consumers, rejected the proposal, arguing that the rate increases will overwhelm low- and moderate-income households and may result in more unpaid bills and service shutoffs.

Joe Stelling, an associate state director for advocacy for AARP, said consumer advocacy groups have been unable to persuade the PSC to reject stiff rate hikes for National Grid and other utilities. AARP has ceased its formal participation in rate proceedings out of frustration that consumers never win, he said.

“The system is not working for consumers,’’ Stelling said. “It hasn’t been. We’re seeing that in this joint proposal. We’re seeing that in others. Something has to change here in New York.”

Hochul has expressed her concern for utility consumers. In February, she wrote a letter asking the PSC to reject a rate hike proposed by Con Edison. In 2022, she called a rate hike proposal from New York State Electric & Gas “outrageous and unacceptable.”

Governors can influence the PSC, but it’s not clear how much Hochul’s comments will impact specific rate proceedings. Commissioners are appointed by the governor to six-year terms, with approval from the state Senate.

The PSC is still reviewing Con Ed’s rate request. In October 2023, the PSC approved a settlement with NYSEG that will raise electric delivery revenues 31% over three years. National Grid’s sister company in Brooklyn won a deal in August that will raise gas delivery rates 58% over three years.

Hochul declined comment through a spokesman.

National Grid’s regulated delivery rates pay for everything except energy itself. The price of electricity and gas is determined in the wholesale market and is passed through to customers without a profit markup. Those commodity prices can be volatile, but thanks to generally low natural gas prices, energy costs have remained fairly steady for much of the past two decades.

Delivery charges, which are regulated by the state, are another matter. They have risen steadily. If National Grid’s rate settlement is approved, its delivery revenues for both electricity and gas will roughly double in the 11 years from 2016 to 2027.

Annual gas delivery revenues were $347 million in 2016. They are slated to reach $662 million in 2027. Electric delivery revenues were $1.58 billion in 2016 and are poised to reach $3 billion in 2027.

Among other things, delivery revenues pay the salaries of National Grid’s 5,400 employees, to which the utility plans to add 480. They pay to fix wires and poles after storms. They pay to replace pipes that leak methane.

On an aging system, those infrastructure costs can run away.

National Grid owns a 24-inch gas pipeline that runs about 40 miles from Phoenix to Oneida. The company may have to replace a 7.5-mile section for safety reasons, according to PSC documents. If so, that would cost about $297 million.

Another gas pipeline, this one 16 inches in diameter, in Schenectady County, also may need to be replaced to comply with safety codes. Replacing the 10-mile section of pipe would cost up to $348 million.

Neither of those projects is included in National Grid’s rate proposal because the outcomes of the safety reviews are still uncertain. Combined, their cost would dwarf the roughly $350 million National Grid plans to spend on the entire gas system each year under the rate plan.

If the two pipeline projects go forward, National Grid will collect the money through surcharges added to gas bills.

Already, more than 2,500 people have submitted comments to the PSC on the rate request, which National Grid filed a year ago. Nearly all ask for the higher rates to be rejected or scaled back.

In the new settlement negotiated with PSC staff and other parties, National Grid agreed to raise electric delivery rates $708 million, or 27%, over three years. That’s about two-thirds of the $1.1 billion increase the company originally sought. The three-year increase in gas delivery revenues of $193.7 million, or 37%, is nearly two-thirds of the $296 million Grid requested.

Before the Public Service Commission reviews the deal, it will set a new comment period for the public to weigh in, said James Denn, speaking for the PSC. The dates for comment have not been set yet, he said.

The PSC may also hold new public hearings on the settlement but is not required to.

“To be determined,” Denn said.

 Staff writer Tim Knauss can be reached at: email | Twitter | 315-470-3023.