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National Grid seeks gas-rate cut, but increase in distribution rate

02:03 PM EST on Friday, November 7, 2008

By Timothy C. Barmann

Journal Staff Writer

Rhode Island utility company National Grid has proposed a cut in natural-gas rates that is even greater than the decrease it sought in September.

The proposal, linked to falling energy prices, would lower the bill of a typical residential customer by about $11 a month, or 8.3 percent, according to a filing the company made with the Public Utilities Commission on Oct. 31.

The bigger decrease reflects a drop in the price of natural-gas futures of about 12 percent over the past two months, according to figures from the Energy Information Administration, part of the U.S. Department of Energy.

The company’s calculation is based on the consumption of a total of 860 therms per residential customer over an 11-month period, beginning Dec. 1.

The previous filing proposed a rate decrease of about $6 a month, or about 4.6 percent.

However, customers may not see much of a decrease in their bills because of a separate proceeding in which National Grid is seeking to raise distribution rates by about 5 percent.

Those charges, which are separate from those for the gas itself, cover the company’s cost of operating and maintaining the gas-distribution network.

In that proceeding, National Grid said it wants to raise rates by $18.7 million annually to speed up replacement of aging gas lines and create a discount for low-income customers. The company is also seeking changes in the natural-gas rate structure to guard against revenue losses that result from the conservation efforts of customers.

The distribution rate has not been raised in 10 years.

The Division of Public Utilities and Carriers, the agency that represents ratepayers in utilities cases, has argued for a lower distribution rate increase –– $8.7 million.

The PUC has already held extensive hearings on the distribution-rate proposals. The commission is expected to make a decision on the proposed increase and decrease by Nov. 30.

The new rates would go into effect on Dec. 1.

As for electricity, National Grid said it plans to propose new rates in the middle of this month.

Those rates are likely to reflect a decrease in energy costs, but also an increase in transmission costs.

Electricity rates have remained unchanged since they were raised by 21.7 percent in July.

tbarmann@projo.com

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