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National Grid Seeks Rate Hikes to Pay for Winter Gas

National Grid has asked state regulators in Massachusetts and Rhode Island for permission to recover some of approximately $67.5 million in under-collected natural gas costs, stating that near-record demand this winter and associated price spikes make rate adjustments necessary.

In separate statements Thursday, the utility said under-collected gas costs from Nov. 1, 2013, to Oct. 31 of this year are expected to total $34.5 million in Rhode Island, while in Massachusetts they are projected to reach about $33 million from Nov. 1, 2013, through April 30.

"Increased demand in January, brought on by unusually cold weather, necessitated the purchase of additional supplies at spot market prices, at a time when nationwide demand was driving up those prices to near-record levels," National Grid said Thursday. "These high prices have continued as the cold weather lingers into late February.

"Because of the need to purchase additional supply at a very high price, the company experienced a significant under-collection of natural gas costs, which the company is now seeking to recover."

Arctic temperatures from polar vortices have wreaked havoc on natural gas spot prices across the country, especially in the Northeast (see Daily GPI ,Jan. 27; Jan. 6).

National Grid submitted a revised gas cost recovery filing with the Rhode Island Public Utilities Commission on Feb. 14 (Docket No. 4436), seeking permission to recover approximately half of the under-collected gas costs in that state, for the period from April 1 through Oct. 31. Collection of the remainder would be deferred for future recovery.

"By doing so, the company is limiting the impact on customer monthly bills from approximately 30% to 16.3%," National Grid said. "This will result in an average monthly increase of about $10 from what customers would have paid, for a total monthly bill of approximately $70 for a residential customer using 37 therms [3.7 million Btu]."

Meanwhile, in Massachusetts, the utility asked the state Department of Public Utilities to grant a two-month increase in the cost of gas adjustment, beginning on March 1. "Depending on customer location, the request will increase the monthly bill of a typical residential natural gas heating customer between 11% and 12%," National Grid said. "This translates into an increase of approximately $20, for a total monthly bill of about $200 for a residential customer using 126 therms [12.6 million Btu]."

National Grid provides electricity to about 3.3 million customers in Massachusetts, New York and Rhode Island. It is also the largest gas distributor in the northeastern U.S., serving about 3.4 million customers in the aforementioned states.

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