National Grid’s 980,000 natural gas customers in Brooklyn were overcharged by $34 or so each during 2010 and 2011, documents filed with the state Public Service Commission show.
Worried that the company would continue to charge high prices, the PSC today froze the delivery portion of National Grid’s rates for 2013 and 2014.
That means what National Grid collects to cover the cost of maintaining the mains and pipes that deliver gas to its customers will not increase before Jan. 1, 2015. Customers’ bills will still vary as the price of natural gas itself fluctuates.
National Grid’s overcharges in Brooklyn amounted to $34 million in 2010, and $34.9 million in 2011, PSC documents show. Divided out among the company’s 980,000 customers, the overcharges work out to a bit more than $34 per customer per year, or around $2.90 per month.
The PSC started investigating the matter “out of a growing concern about the company’s high earnings,” a press release said. The commission hasn’t published any numbers yet about National Grid’s charges in 2012.
National Grid is selling gas in Brooklyn according to a rate plan first approved by the state in 2007. It could have filed for a rate increase last year, but did not do so.
The overcharges occurred because National Grid’s labor costs and other expenses were lower than the PSC figured they’d be when it set up its rate plan, documents show.
When utility companies overcharge, the state orders them to set aside the extra money in a “balancing account.” That’s what happened with the $68.9 million the state says National Grid overcharged in 2010 and 2011. But balancing accounts work two ways. If National Grid runs into some kind of catastrophe that costs more money than the state expected, it could pull money out of the balancing account.
A PSC press release today says 20 percent of the extra money National Grid collected can go to its shareholders.
The other 80 percent is to be used to benefit customers, including $3 million in additional aid for low-income people. The company has also agreed to spend more money on fixing leaky pipes, improving its response to emergencies and doing a better job answering calls from customers.
The PSC’s order today “will foster continued rate stability and promote the affordability of rates, while providing the company with the resources and motivation it needs to maintain and enhance the safety and adequacy of its gas service,” said Garry Brown, its chairman.
I’ve reached out to National Grid for comment.
UPDATE: Here’s a statement from National Grid.
Ken Daly, President, National Grid New York, said: “We are pleased that the new plan sets out a framework of increased investment, stable customer rates, and performance metrics to deliver high standards of customer service, safety and reliability for our New York gas customers. The plan builds on our prior five-year rate freeze and allows us to continue to provide excellent service for our New York Metro area customers.”