Department of Public Utilities Issues Order Focusing on Safety, Announcing Energy Rates

Department of Public Utilities Issues Order Focusing on Safety,

Announcing Energy Rates

After Public Process, Department Reduces Rates Initially Requested

BOSTON – September 28, 2018 – The Department of Public Utilities (DPU) today issued a final Order that will enhance pipeline safety, require accountability, upgrade information system platforms, and improve customer service while reducing the total rate increase request of Boston Gas Company and Colonial Gas Company, together doing business as National Grid by over $97 million annually. The action by the DPU follows a ten month investigation that included seven public hearings across National Grid’s service territory, twelve days of evidentiary hearings, and a review of more than a thousand exhibits. National Grid provides gas service to approximately 908,000 customers in 116 cities and towns in the Commonwealth.

In issuing the Order, DPU reduced Boston Gas’ revenue request by approximately $78 million – decreasing Boston Gas’ requested increase of $178 million by 43%. Under the company’s proposal, a typical Boston Gas residential heating customer would have experienced an annual bill increase of $178.81, or 16%.  After the Department’s Order, a typical residential heating customer will experience an annual bill increase of $88.22, or 8%. The Order reduces Colonial Gas’ base revenue request by $19 million — decreasing Colonial Gas’ requested increase of $36.6 million by approximately 52%.  Similarly, under the company’s proposal, a typical Colonial Gas residential heating customer would have experienced an annual bill increase of $123.15, or 13%.  After the Department’s Order, a typical residential heating customer will experience an annual bill increase of $38.31, or 4%. 

As part of these revenue reductions, the Order found that both Boston Gas and Colonial Gas, under National Grid’s management, had shown persistent disregard for federal and state pipeline safety regulations to the detriment of the Companies’ ratepayers, and, as a result, the DPU reduced National Grid’s proposed 10.5% return on equity to 9.5%.  This change decreased the rates that National Grid had requested by approximately $15 million annually. Today’s decision marks the first time that Boston Gas’ gas base distribution rates have changed since 2010, and the first time that Colonial Gas’ gas base distribution rates have changed since 2010.

“By significantly reducing the rate increases proposed by National Grid, the Order issued by the Department of Public Utilities will enhance safe and reliable natural gas service for ratepayers across the Commonwealth while minimizing financial impacts on customers,” said Department of Public Utilities Chair Angela O’Connor. “Additionally, the Order requires National Grid to pursue important investments in information systems platforms and builds upon the Department’s announcement of their intent to hire an Independent Evaluator to assess, out of an abundance of caution, the safety of pipeline infrastructure throughout the Commonwealth.”

In addition, the Order notes that, out of an abundance of caution, the DPU recentlyannounced their intent to hire an independent evaluator to conduct a statewide examination of the safety of the natural gas distribution system within the Commonwealth. The DPU’s Pipeline Engineering and Safety Division also has multiple ongoing investigations into National Grid’s safety practices.  As part of those investigations there is today a request for information regarding staffing, costs, and the services that National Grid has provided during the company’s current labor lockout compared to the same period in previous years.

The new rates contained within the Order will go into effect November 1, 2018.