National Grid and the New York Public Service Commission have filed a Joint Proposal for a three-year rate plan settlement for the KeySpan Energy Delivery New York (KEDNY) and KeySpan Energy Delivery Long Island (KEDLI) gas distribution utilities.
The final decision from the Commission is expected in late 2016 with new rates effective January 2017.
The original rate case filing in January 2016 was for a one-year rate plan, however a three-year Joint Proposal (from 2017 to 2019) has been filed, in order to phase-in customer bill impacts over three years.
The Joint Proposal includes revenue increases over each of the three years, an allowed 9% Return on Equity for both utilities and a significant capital programme of $3 billion in total.
KEDNY revenues would increase by $272 million in 2017 which compares to National Grid's initial request of $331 million, after including $86 million of Site Investigation and Remediation (SIR) and other pass-through costs. For 2018 and 2019 incremental year-on-year revenue increases would be $41 million and $49 million, respectively.
KEDLI revenues would increase by $112 million in 2017 which compares to National Grid's initial request of $180 million, after including $38 million of SIR and other pass-through costs. For 2018 and 2019 incremental year-on-year revenue increases would be $20 million and $27 million, respectively.
The above increases will be reflected in US GAAP revenues and therefore in the Return on Equity calculations for the businesses. Customer bill increases, however, will be more evenly phased across the three years, with a smaller increase in the first year and higher increases in the subsequent two years. IFRS revenue will reflect this more evenly phased profile.
Under the Joint Proposal, significant capital is expected to be invested over the three-year period, totaling $3 billion. This comprises $1.9 billion in KEDNY and $1.1 billion in KEDLI to modernise gas infrastructure and enhance safety and reliability with accelerated Leak Prone Pipe replacement.
This settlement will allow us to continue to meet our customer needs and support the local communities we serve, while managing the customer bill impact over three years.