For Immediate Release - November 04, 2010

DPU Cuts Proposed New Charges for National Grid Natural Gas Customers by Nearly Half

Decision reduces additional revenue requested by Boston Gas Company, Essex Gas Company, and Colonial Gas Company

BOSTON - The Department of Public Utilities (DPU) issued an order late yesterday substantially reducing rate increases proposed by Boston Gas Company, Essex Gas Company and Colonial Gas Company - together doing business as National Grid links to PDF file. The DPU's action reduced the Boston and Essex Gas Companies' revenue request by $36.4 million (46 percent), and Colonial Gas Company's by $9.6 million (36 percent). All told, the DPU's order, which culminated a more than six-month proceeding, denied the three Grid companies nearly half of the additional revenue sought in April 2010 rate filings.

Yesterday's action marked the first time in many years that the DPU has decided a rate case for any of the three companies. The last rate increases were in 2003 for Boston Gas, 1996 for Essex Gas and 1993 for Colonial Gas.

The DPU also approved National Grid's proposed revenue "decoupling" mechanism, submitted in response to a July 2008 DPU policy order requiring utility rate structures that promote better use of energy conservation. Required under the Green Communities Act of 2008, decoupling eliminates disincentives for utilities to promote large-scale energy efficiency programs. The DPU, which approved nation-leading energy efficiency plans for the state's investor-owned utilities earlier this year, continued its commitment to greater energy efficiency through approval of National Grid's proposed "inclining block rates," which reward customers who conserve energy.

In addition, the DPU approved National Grid's proposal to step up replacement of aging steel and cast iron pipes, providing the company with a cost recovery mechanism to facilitate the upgrade of its pipeline infrastructure.

"The DPU's actions will result in multiple benefits for National Grid gas customers - cost containment, expansion of critical energy saving efficiency programs, and - importantly - replacement of aging pipes with safe and modern infrastructure," DPU Chair Ann Berwick said.

The DPU found that both the decoupling provision and the mechanism for covering the costs of replacing infrastructure reduce the company's risk, and therefore reduced National Grid's request for a return on equity from 11.3 to 9.75 - the lowest return on equity the DPU has ordered in a gas or electric rate case in over 50 years.

The actual impact on customers' bills will depend upon the type and level of consumption of each customer. The table below shows bill impacts on each company's average residential customer, broken down by heating versus non-heating gas use and by summer versus winter usage:



Residential Bill Impact Summary (Approximate numbers)

Boston Gas

Essex Gas

Res. Gas Heat

Res. Non-Heat

Res. Gas Heat

Res. Non-Heat

Winter

Summer

Winter

Summer

Winter

Summer

Winter

Summer

Monthly Usage (Therms)

125

30

25

15

125

30

25

15

Bill at Current Rates ($)

207.42

48.78

52.89

29.40

201.24

37.95

57.31

28.42

Bill at Ordered Rates ($)

216.26

45.51

55.68

29.83

216.26

45.06

55.68

29.83

Change ($)

8.85

-3.28

2.79

0.43

15.03

7.11

-1.63

1.40

Change (%)

4.3%

-6.7%

5.3%

1.4%

7.5%

18.7%

-2.8%

4.9%

Colonial-Lowell

Colonial-Cape

Res. Gas Heat

Res. Non-Heat

Res. Gas Heat

Res. Non-Heat

Winter

Summer

Winter

Summer

Winter

Summer

Winter

Summer

Monthly Usage (Therms)

125

30

25

15

125

30

25

15

Bill at Current Rates ($)

206.52

47.12

54.61

27.17

205.56

37.44

60.68

31.38

Bill at Ordered Rates ($)

208.50

42.29

55.85

28.75

208.50

42.29

55.85

28.75

Change ($)

1.99

-4.83

1.24

1.59

2.94

4.86

-4.83

-2.63

Change (%)

1.0%

-10.3%

2.3%

5.8%

1.4%

13.0%

-8.0%

-8.4%

The consolidation of Boston Gas and Essex Gas and of the Lowell and Cape Cod divisions of Colonial Gas made this among the most complicated rate cases ever undertaken by the DPU. The 643-page decision involved approximately 3,400 exhibits and represents the culmination of 20 days of evidentiary hearings and seven public hearings in National Grid's service territory.

National Grid serves more than 845,000 gas customers (595,472 Boston Gas, 53,678 Essex Gas and 195,997 Colonial Gas) in Massachusetts.