National Grid Increases Rates as Lawmakers and Governor Push Back

The New York State Public Service Commission recently approved a rate proposal by National Grid which would see rates for electricity go up by 11% and rates for gas go up by 10%. 

The Commission approved the proposal on Aug. 14. The proposal was signed by multiple agencies, companies and other organizations including the US Department of Defense, Walmart, The New York Solar Energies of New York, The New York Geothermal Energy Organization, and the International Brotherhood of Electrical Workers Local Union No. 97 — among others. 

Under the proposal, rates across the areas National Grid serves would go up for residential customers by around 11- 12% for year one, five percent for year two and three percent for year three. In terms of gas expenses, National Grid states in its proposal that rates will go up by around eight percent across all three years it covers. 

The rate increase comes after over a year of negotiations between National Grid and various stakeholders. 

Under the initial proposal rates would’ve increased electricity rates for residential consumers by 15% and gas rates for residential consumers by 20%. These rates were reduced through the negotiating process to where they are in the current proposal. 

Under the approved proposal, revenues for National Grid from electricity would increase by $167.3 million in year 1, $297.4 million in year 2 and $243.4 million in year 3. 

“The main rate drivers of the recommended increases are due to increases to operations and maintenance (O&M) expense, return on and return of (i.e., depreciation expense) capital investments, and a change in the return on equity to reflect market conditions offset by lower than previously forecast property taxes and a forecasted increase in revenue,” The proposal said. 

The increased rate isn’t without controversy. The report detailed how in hearings across the state during the year of negotiations, 62 individuals spoke up about the rates and nearly 9,000 people submitted written comments. 

“Many speakers opposed the proposed rate increases, stating that bills are already unaffordable and suggesting that executive compensation and shareholder dividends be reduced prior to raising rates,” the proposal stated “Others noted that the requested rate increases outpace inflation and suggested that there should be methods for funding necessary infrastructure improvements without rate increases.”

Despite these comments, The Commission ultimately decided to approve the rate increases. 

“While reflecting a considerable reduction from National Grid’s original request, the Joint Proposal nonetheless provides sufficient funding for the Company to maintain safe, adequate and reliable utility service at just and reasonable rates; thus, the Joint Proposal appropriately balances the interests of ratepayers, the Company, and its investors,” The Commission stated. 

The approval was met with swift backlash from many New York lawmakers and other politicians. Governor Kathy Hochul released a statement criticizing the decision. 

“While I appreciate that the New York Public Service Commission worked to significantly lower the outrageously high initial rate proposals, it’s still not enough,” Governor Hochul said.  “I have been crystal clear that utilities must make ratepayer affordability the priority.”

In response to the rate hike, Assemblyman Angelo Santabarbara, whose represents parts of Schenectady and Amsterdam, announced he would introduce legislation which would allow the legislature to review any rate hike by the Public Service Commission. 

“Utility costs are already a significant burden for New Yorkers,” Santabarbara said. “This bill makes sure that when major decisions like this are made, elected representatives have the chance to step in on behalf of the people they serve – even if the PSC has already approved it. In this case, we still have time to review and potentially reverse this increase before it becomes permanent.”

This isn’t Santabarbara’s first time introducing legislation to exert legislative control over the Public Service Commission. Back in January, Santabarbara proposed legislation which would require legislative consent on all proposed rate hikes. The same bill was proposed in the senate by Senator James Tedisco, who represents all of Saratoga County and parts of Schenectady and Kevin Parker who represents parts of Brooklyn. 

The legislation was referred to committee in both houses and no action has been taken since.