National Grid got rave reviews Thursday afternoon from business groups for its proposed three-year rate agreement that would increase the company’s revenues but still lead to lower bills for its customers.
Six representatives from companies and business groups stretching from the Buffalo Niagara region to Genesee County all praised the rate proposal for lowering customer bills, while also expanding the utility’s economic development programs and continuing its massive investment in its power distribution network.
Paul Pfeiffer, a spokesman for the Buffalo Niagara Enterprise business development and marketing group, said the lower rates will be good for both business and residents.
“Any relief that accrues to the bottom line can only be viewed as a positive,” he said during a hearing Thursday afternoon conducted by the State Public Service Commission, which is expected to make a decision on the rate case by March.
No residential customers addressed the merits of the rate proposal during the hearing in Cheektowaga Town Hall.
Under the agreement, a typical National Grid residential electricity customer’s average monthly bill would drop by nearly 7 percent in April and then rise modestly during each of the following two years. After the initial drop, a typical residential customer’s estimated bill would rise by a projected 3.3 percent in April 2014 and another 2.1 percent in April 2015,
In all, the joint proposal between the utility, the PSC’s staff and other interested parties would increase National Grid’s electricity revenues by $123 million over three years. But that increase would be more than offset by the expiration of $190 million in surcharges that are ending and other customer credits, leading to a 1.7 percent reduction in overall electric bills, the PSC said.
Peter Cammarata, president of Buffalo Urban Development Corp., said the three-year term of the rate proposal will help make electricity costs more predictable for businesses. “The three-year period really provides us with the stability we need to sell our sites,” he said.
The plan also drew praise from Grant Lesswing, a business development officer for the Erie County Industrial Development Agency, whose board of directors includes National Grid’s top Western New York executive, Dennis Elsenbeck.
Lesswing said the company’s plans to spend $1.3 billion on infrastructure improvements will make the region’s electricity system more reliable – an important factor for businesses.
“The infrastructure in Western New York is aged and, in this rate settlement, having National Grid go after it with upgrades is really paramount,” Lesswing said.
A 22 percent increase in funding for National Grid’s economic development programs, which would rise to $11 million from the current $9 million, also would help the region attract new businesses and help existing ones expand, said Alfred J. Wright, the Buffalo Niagara Partnership’s government affairs manager.
Under the proposal, a typical National Grid residential electric customer, using 600 kilowatt-hours of electricity a month, would see the monthly bill drop from $82.49 today to $77.05 during the first year of the agreement. The typical bill would then rise by 3.3 percent to $79.57 during the second year and by another 2.1 percent to $81.24 during the final year of the proposed settlement.
Typical bills for small commercial and industrial customers would drop by 6.2 percent to 8.4 percent during the first year and then rise by 1.5 percent to 4.2 percent during the second year and by 1.5 percent to 2.8 percent during the third year.
Typical bills for big industrial customers would drop by 1.5 percent to 3.8 percent during the first year and then rise by 1.9 percent to 2.2 percent during the second year, followed by an increase of 0.4 percent to 1 percent in the third year, the filing said.
The joint proposal, if approved, would continue a trend in rate agreements that has seen average customer bills decline by offsetting the impact of higher delivery rates with savings from expiring surcharges and past costs that are no longer being collected.
The bill projections include a forecast that the commodity costs of electricity, which are passed on to consumers at cost and can vary with market conditions, will essentially hold steady over the next three years. Electricity commodity costs have declined in recent years because of plunging natural gas prices, which is used to fuel many power plants.