WILL HE WEAKEN THE NATIONAL GRID?

SCHUMER URGES REGULATORS TO BLOCK MASSIVE BACK DOOR NATIONAL GRID DELIVERY RATE HIKE - STRAPPED CONSUMERS HAVE BEEN WAITING FOR RELIEF FOR NEARLY A DECADE

Yesterday, U.S. Senator Charles E. Schumer called on the New York State Public Service Commission (PSC) to block a 20% electricity delivery rate hike requested by National Grid Power.  Schumer said that for almost a decade consumers and businesses have been expecting a rate cut once National Grid paid down the debt it took on after its purchase of Niagara Mohawk.  Over the past ten years, New Yorkers have paid a "competitive transition charge" totaling $4.8 billion to finance this debt, which is scheduled to be paid down in 2011. 

The delivery rate hike approved at the time of the purchase, in 2002, has caused the Central New York region to have some of the highest electricity rates in the country, acting as an anchor around the neck of economic development efforts.  Now, instead of providing their customers with the relief they deserve, National Grid is asking for yet another increase.  Schumer said that while this delivery rate increase will not cause an increase in customers' bills, it will wipe out any relief they would have seen and leave electricity costs in the region sky high. 

"For almost a decade, electricity prices far above the national average have been a burden to ratepayers and a yoke around the neck of economic development efforts in Central New York; it's time for the Public Service Commission to send a loud and clear message to National Gird that this classic game of bait and switch is fooling no one," Schumer said. "In 2002 customers were hit with big rate hikes and they expected relief when the debt was paid off - well that day is here and it's time for National Grid to deliver rate relief for its customers instead of coming back for another massive increase." 

In 2002, National Grid took over Niagara Mohawk Power Corporation and assumed responsibility for Niagara's debt. Over the past ten years, New Yorkers have paid a "competitive transition charge" to finance this debt, which is scheduled to be paid down in 2011. For families forced to shoulder the burden of this debt through higher utility bills, the year 2011 was to mark a significant decrease in their electricity payments. Unfortunately, National Grid has applied for a 20% percent delivery rate increase beginning in 2011, meaning residents will receive no relief in their utility bills. 

Schumer said families served by National Grid should not be forced to continue paying unduly high rates after National Grid has paid down its debt. If National Grid is allowed to enact the delivery rate increase it has proposed, it would wipe out the rate reductions New Yorkers have waited ten years to see. It is clear that National Grid does not need to raise delivery rates in order to cover costs because it has operated successfully while paying down its debt since 2002. This effort to raise delivery rates will allow National Grid to capture greater profits without providing relief to hard working New Yorkers. Additionally, given the economic challenges New Yorkers are facing this winter it is particularly disturbing that National Grid has not presented a plan for rate relief for its customers.  

National Grid's electric prices are among the highest in the nation, and have consistently been a hindrance when trying to attract or expand businesses - especially ones that require a great deal of power - to the region.  In 2008, residential rates were 37% higher than the national average and commercial rates were over 60% higher, according to Department of Energy statistics. National Grid has consistently asked the Public Service Commission to approve delivery rate hikes.

"High electricity prices have put businesses in Central New York at a competitive disadvantage for far too long, and this is an opportunity to stem the rising tide," continued Schumer. "If National Grid provided more competitive prices, they would see greater economic growth, which would provide them a larger custom base and greater revenue.  Instead, they have chosen to try to squeeze more money out of fewer customers, and we're headed for a downward spiral." 

Schumer said that the time has come for National Grid to own up to its strategy of hiding its rate hike request by saying that consumers won't see a change in their bill.  "National Grid's actions are the same as a bank asking you to continue to make mortgage payments after the mortgage is all paid, and saying that you shouldn't be upset because the payments aren't increasing," continued Schumer. 

Schumer's letter to Secretary Brilling can be seen below:

Honorable Jaclyn A. Brilling

Secretary

New York Public Service Commission

Three Empire State Plaza

Albany, New York 12223

Dear Ms. Brilling:

I write to urge you to reject any request for electric rate changes proposed by National Grid (Case 10-E-0050) until the company outlines how it will deliver rate relief to customers who were required to pay unusually high utility costs to cover debt that was incurred by National Grid when it purchased Niagara Mohawk Power Corporation. 

In December 2001, National Grid was authorized to take over Niagara Mohawk Power Corp. (Case 01-M-0075) and assumed responsibility for Niagara's debt. Over the past ten years, New Yorkers have paid a  "competitive transition charge" totaling $4.8 billion to finance this debt, which is scheduled to be paid down in 2011. For families forced to shoulder the burden of this debt through higher utility bills, the year 2011 was to mark a significant decrease in their electricity payments. Unfortunately, National Grid has applied for a 20 percent rate increase beginning in 2011, meaning residents will receive no relief in their utility bills, despite assurances from the company that the increase will be offset by extending the amortization schedule for the competitive transition charge.

Families served by National Grid should not be forced to continue paying unduly high rates after National Grid has paid down its debt. If National Grid is allowed to enact the rate increase it has proposed, this would wipe out the rate reductions New Yorkers have waited ten years to see. It is clear that National Grid does not need to raise rates in order to cover costs because it has operated successfully while paying down its debt since 2002. This effort to raise rates will allow National Grid to capture greater profits without providing rate relief to hard working New Yorkers. Additionally, given the economic challenges New Yorkers are facing this year, it is particularly disturbing that National Grid has not presented a viable plan for rate relief for its customers.

National Grid's electric prices are among the highest in the nation.  In 2008, residential rates were 37% higher than average national rates and commercial rates were over 60% higher, according to the U.S. Department of Energy. In addition, National Grid has consistently asked the Public Service Commission to approve delivery rate hikes.  For example, National Grid requested a 20% delivery rate hike for electricity beginning in 2011.  Such delivery rate hikes can serve as an indirect form of electricity rate hikes - customers often see their costs rise even as their energy consumption does not. Delivery rate hikes are especially burdensome for families and seniors trying to cut their energy cost, as their delivery charges can end up exceeding their usage costs.  

I urge you to deny any requests to change rates until National Grid has explained how it will reduce rates for those it serves by eliminating the competitive transition charge, as originally intended under the Commission's order approving the merger.  Thank you for your attention to this important request. If you have any questions, please do not hesitate to contact me.

Sincerely,  

Charles E. Schumer

United States Senator