Is it reasonable for National Grid to be asking for a rate increase to invest in its electricity infrastructure?

By PBN Staff
Posted 6/8/09

National Grid requested an 11.2 percent rate hike in its electricity transmission rate last week, saying that it needed to pay for continuing infrastructure improvements that will increase "the reliability and safety of the system."

While there is no question that electricity use continues to grow, the issue comes down to whether National Grid is justified in charging more for system investments that some believe it should have been paying for out of its existing rate structure.

Is it a reasonable assumption to make that National Grid should already have the income it needs in order to make the investments that are necessary to keep the electricity grid up to date?

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The bigger issue here is the "decoupling" of rates requested in this rate case. Decoupling can remove the disincentive for efficiency and conservation, but the request is to transfer all risk for declining revenues to consumers, including bad economy, mild weather, disruptive technologies, etc. Decoupling should be limited to lost revenues from the energy efficiency programs National Grid already runs, and makes a profit on if they succeed. We should make sure that consumers are protected and there is sufficient funding of infrastructure. We don't want our grid to look like our pothole-ridden streets!

Tuesday, June 9, 2009 | Report this
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