National Grid seeking rate reduction

NATIONAL GRID estimates that customers could see a 7.5 to 8 percent reduction in their monthly electricity bills this winter thanks largely to a shift in its pricing model.
NATIONAL GRID estimates that customers could see a 7.5 to 8 percent reduction in their monthly electricity bills this winter thanks largely to a shift in its pricing model.

PROVIDENCE – Rhode Island’s largest electric utility estimates customers could see a 7.5 to 8 percent reduction in their monthly electricity bills this winter thanks largely to a shift in its pricing model.
National Grid, Rhode Island’s largest utility company, says it is asking the R.I. Public Utilities Commission to reduce the current standard rate of 10.4 cents per kilowatt hour to 8.9 cents per kilowatt, according to a press release.
A typical National Grid customer now paying about $99.15 per month would see roughly a $7.68 reduction.
The change in pay periods is the product of a PUC decision made earlier this year that changed the utility’s pricing period from the two six-month periods of January through June and July through December to October through March and April through September.
The impetus behind this change stems from repeated public outcry each winter when the demand for natural gas skyrockets, effectively increasing customers’ monthly bills. Because of restricted infrastructure, the popular and relatively cheap natural gas supply becomes limited in Rhode Island, forcing electricity generators to pay spot-market prices for other – typically more expensive – energy, which in turn raises the price on electricity.
The PUC expects that pairing less-expensive summer months with more-expensive winter months could alleviate some of the financial pressures felt by customers during months of peak demand.
In order to transition into the new pricing periods, however, National Grid will have to hold a one-time, nine-month pricing period from January to September, which is a driver behind the recommended reduction. The longer pay period will include more summer months, during which natural gas demand is lower, effectively reducing costs associated with the fewer number of winter months.
But this pay period’s reduction may be the exception, according to Timothy F. Horan, president of National Grid in Rhode Island.
“Our region will continue to see price volatility as long as natural gas pipeline constraints during the winter months drive up the cost of electricity for that time of year,” he said in a statement.
Last year, National Grid came under fire after requesting a more than 26 percent price increase that would’ve taken effect during the six-month pay period on Jan. 1.
The PUC ultimately decided against the sharp increase, and voted instead in favor of spreading the payments out throughout the year; it granted a 14.3 percent increase.
The infrastructure allowing natural gas into Rhode Island is limited and although there’s been an increase in the volume of alternative energy, such as solar and wind, in the last decade, it – along with plans to expand gas pipeline capacity in to the region – have not yet made up for the gap seen between Rhode Island’s supply and demand, especially during winter months.
National Grid predicts that once it reverts back to its six-month price period beginning in October 2016, customers could again experience higher winter electricity prices, as is currently seen in Massachusetts. The proposed reduction is subject to PUC approval.
“National Grid realizes that while this modest price reduction can be seen as good news, it may be the exception to the winter pricing rule,” Horan added.

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