National Grid Distribution Rate Hike and What it Means for New York Residents

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New York is staring down the barrel of gun, and it doesn’t help that the National Grid is trying to soften the blow. It’s a long, slow hit to New York and its millions of residents, one that means an increase of delivery rates by $326 million a year for electricity and $81 million for natural gas—spread over three years.

National Grid’s Dooming Proposal

The proposed idea took root back in 2017, and actual implementation of the rate hike was effective in 2018 but was amended due to public outcry. This was due in part because the National Grid’s significant rate hike in New York would still be just that—significant—even if spread over this long period of time. The three-year extension would have the average household pay 10% more on energy bills, something that most consumers simply cannot afford.

The average Middletown residence uses 77 therms of gas per month, and under this proposition, the total bill would increase 1.7% in the first year, jumping to 4.5% the second year, and 4.4% the third year. That’s an interval of $1.20, to $3.10, to $3.18, and for most residential customers, shelling out the extra money per month could be devastating to their budget.

For customers utilizing electricity in their residence, the new rate plan for this usage isn’t any better. The leap is: 2.9% the first year, translating to $2.22, 3.8% or $3.03 the second year, and capping off at 3.9% or $3.25 the third year, based on the average household consuming 600kWh of electricity per month.

The first year has just about wrapped up, as the new rate hike was effective in April 2018, where the second year will begin this April 2019. When the plan was first announced, backlash was inevitable, and the National Grid heard from its residential consumers, municipalities and a plethora of advocacy groups last year.

Naturally, these stair-stepping rate hikes have a dramatic impact on low-income houses, and although New York has seen an uptick of people living above the federal poverty line, there are still 20-40% of New York residents that struggle to make ends meet. Such an increase in energy rates could throw a tight budget right off balance, and with the second year of these rate hikes coming up this April, these low-income households also see an increase in financial woes.

The Silver Lining for New York Residents This Year

The Public Service Commission answered many of these concerns brought to their attention by cutting $351 million from the National Grid’s initial request, an outstanding 86% reduction. The Commission brought forth further details to accompany the proposal as well, such as a low-income discount program that would address the specific needs of households and residents struggling with accommodating for the rate hikes.

A Helping Hand for Low-Income Households

The policy behind the low-income discount program limits energy costs to no more than 6% of household income, which affects New York’s 2.3 million low-income households. When the National Grid imposed its first year of rate increases, the company expected to have about 160,000 low-income electric customers and 60,000 low-income gas customers.

This effort to lessen the substantial blow of rate hikes has helped to lessen the financial burden on customers, especially with the encroaching threat of 2019’s rate increase lurking just around the corner.

The National Grid will be generously expanding its affordability program by nearly $70 million, threefold its investment. After the initial uproar about energy costs driving up over the next few years, the National Grid has made efforts to establish these energy-affordability programs and cut back on the energy and utility costs for their low-income customers.

The Commission and the National Grid are striving for statewide energy efficiency, which in the long-term, will immensely help customers and promote green policy awareness, something that New York prides itself on. The Commission has encouraged that the company’s energy efficiency program be increased by 40%, with a 20% funding increase.

With the Commission’s Policies Come Hope

No one likes to see their energy bill climb upward each year, especially when its necessary to keep a home heated and the lights on.

It’s not all bad.  The National Grid and the Commission worked together to establish a capital investment plan that would better the system statewide, trickling down to the shady streets of Middletown residential neighborhoods. National Grid will be investing an impressive amount of $2.5 billion over these three years of rate increases to modernize the transmission and distribution system.

Middletown residents know how frequent storms breeze through their town, often causing power outages and persistent problems in their service areas. New York neighborhoods, Middletown included, get hit with severe storms that aren’t just limited to specific seasons. 

New Yorkers often have to slog through wintery slush, face freezing temperatures that are destructive enough on their own accord, shovel themselves out of several feet of snow, and not to mention the torrent of thunderstorms, and even deadlier threat of hurricanes, such as 2012’s historic and detrimental Hurricane Sandy. The Commission’s and the National Grid’s push for such a makeover to the current system will help maintain its integrity during these severe weather conditions. 

Additionally, the Commission has requested that for a part of the capital investment decision, the National Grid research and investigate non-wire alternatives that will ultimately provide the same consistent and safe services, but at a lower cost in comparison to traditional infrastructure investments.

Still, the Commission and National Grid made headway in bettering New York and its municipalities despite the three-year increase. Street lighting, for instance, had several provisions adopted between the Commission and National Grid, stating that the National Grid’s service in its upstate territory will be upgraded to light emitting diodes, otherwise known as LEDs. Then, failed roadway lighting will be replaced by the company as well as the option for local municipalities like Middletown to purchase street lighting at the lowest possible price.

The Silver Lining for New York Residents

It’s hard to see through the dreariness of a three-year long rate hike for energy costs, but there’s a silver lining for New York residents. The policies presented by the Commission and implemented by the National Grid will ultimately have a positive effect on statewide energy efficiency networks, environmentally conscious programs, and overall modernize the way energy is generated and distributed.

It seems as if any big conglomerate executes such a decision in terms of cost increases, there’s cause for concern. The public acts as a balance to the power of big companies like the National Grid, checked by bodies like the Public Service Commission, ensuring that the increases in rates in monthly billing is not with frivolity.

The Commission has successfully passed policies that’ll modernize the electric transmission and distribution system, which in turn will help customers during common New York storms and adverse weather, acted in service quality assurance programs for better customer service, and pledged to increase overall energy efficiency through more funding to its relative programs.

Conclusively, yes, rates are high and will become higher until 2020, but with National Grid’s increase, customers can look to a better, greener future. Learn more about New York deregulated energy markets here.