LOWELL — Stock up now on blankets and handwarmers for next winter.
National Grid has filed a petition with the state Department of Public Utilities to increase the base distribution rates the company charges customers for gas delivery service. The proposed $342 million increase will affect the total delivery service component of a customer’s gas bill.
The filing kicked off an 11-month review process that will culminate with the DPU issuing an order in late November.
If the DPU approves the petition, starting Dec. 1, bills for almost 1 million customers in 144 communities will jump 10% during peak season, and about 20% in the peak off-season.
It’s a rate increase that several officials, including from the Attorney General’s Office, as well as several local leaders, spoke out against during a public hearing at Lowell’s Senior Center on Wednesday night. The hearing was the first of seven hearings being held across the commonwealth through April.
District 5 Lowell City Councilor Kim Scott told the commissioners, including Commissioner Staci Rubin, that the rate hike was “too big.” Scott represents the Sacred Heart and South Lowell neighborhoods.
“This definitely affects a lot of the residents in my district,” Scott said, many of whom she said live in an economic justice area. “Working families have told me that they are choosing between heating their homes and buying food and other things for their families.”
She asked the DPU to deny National Grid’s requested increase.
By law, the Attorney General’s Office represents the interest of utility customers and rate cases filed with the DPU. Assistant Attorney General Mary Gardner broke down the rate increases in National Grid’s petition for the audience.
“The Attorney General’s Office has intervened in this gas distribution rate proceeding on behalf of National Grid customers,” Gardner said.
For residential heating customers in the Boston Gas Service area, the average monthly bill will go up by about $24 per month, which is a 9.8% increase in the first year, taking the average across the summer and winter seasons. The Boston Gas Service area includes communities in Greater Boston and central Massachusetts.
Residential heating customers in the former Colonial Gas area, which covers Cape Cod and several communities in the Merrimack Valley like Lowell, the average customer bill will go up by about $25 per month, which is a 10.9% increase in the first year.
The monthly bill impacts for commercial and industrial customers range from a decrease of almost 38% to an increase of almost 38%.
“Massachusetts residents are already feeling the pressure of rising utility bills, especially after weeks of extreme cold this winter,” Gardner said. “Customers need and deserve rate relief on both their gas and electric bills.”
In addition to the initial increase, the company is also requesting approval of a five-year performance-based rate-making plan.
If National Grid’s rate-making plan is approved as filed, the company will be allowed to further increase customer rates annually during the five-year term, causing rates to increase by 46% by the end of five years, Gardner said.
“Our attorneys and experts are already hard at work investigating every aspect of the company’s proposal,” she said.
Another state office is digging into the National Grid proposal and expressed similar concerns as the Attorney General’s Office with the $342 million revenue increase proposed by National Grid.
Elizabeth Mahony, commissioner of the Massachusetts Department of Energy Resources, called the proposed rate hike “concerning,” and that “the gas companies have failed to explain why gas costs are increasing so rapidly.”
The Department of Energy Resources is the state’s energy office and its mission is to create a clean affordable, resilient and equitable energy future for all residents in the commonwealth.
“Energy affordability is top of mind for the Healey-Driscoll administration,” Mahony said.
She said her department was digging into the utility’s return on equity, which is the profit that the investor-owned utility can earn on its capital. National Grid proposes to increase its return on equity from 9.7% to 10.2%.
“This would provide a ROE significantly higher than any other gas company in Massachusetts,” Mahony said. “This would be the highest profit return allowed for a utility since at least 2010, and possibly ever in Massachusetts.”
She urged the DPU to reject the return on equity rate for National Grid. As an example of that impact, she noted that reducing the 10.25% ROE requested by the utility to the rate proposed in the Liberty Gas settlement of 9.3%, would save customers nearly $40 million.
“As we continue to address energy affordability, it is unconscionable for the company to ask to increase its profits to this level,” Mahony said. “Heightened scrutiny must be placed on utility ROEs.”
The public hearing opened with a statement by Lisa Wieland, president of National Grid New England, who cited extensive investments to improve safety, efficiency and reliability for residential and business customers as justification for the rate hike.
“The proposal we filed in January reflects the investments necessary to continue delivering safe and reliable energy in a changing economic and operating environment, while using every tool available in our control to manage costs and support our customers,” she said. “We are confident that this request is both responsible and necessary to meet today’s needs and continue providing the level of service our customers expect and that our customers deserve.”
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