Department of Public Utilities Announces Final Order on National Grid Rates

• Executive Office of Energy and Environmental Affairs
• Department of Public Utilities

BOSTON- The Department of Public Utilities (DPU) today announced it has issued a final Order in a rate case for National Grid that will lead to reductions in greenhouse gas emissions and improvements in infrastructure safety and service reliability, while significantly reducing the total rate increase request made by the company. The action by the DPU follows a nearly year-long investigation that included two virtual public hearings, 13 days of virtual evidentiary hearings, and a review of approximately 4,000 exhibits. National Grid provides gas service to approximately 930,000 customers in 144 towns in the Commonwealth.

The DPU's Order reduced National Grid's base distribution revenue increase request of approximately $220.7 million by $75.9 million. The DPU approved a base distribution revenue increase of approximately $144.8 million. The rates approved in the Order will take effect on November 1, 2021. The last base distribution rate case was decided in 2018 for rates effective October 1, 2018.

"By reducing the rate increases proposed by National Grid, the final results of this order mitigate financial impacts on customers while ensuring safe and reliable service for ratepayers," said DPU Chairman Matthew Nelson. "Today's decision also enables National Gridto pursue improvements to service and further the Commonwealth's emissions reduction and pipeline safety goals."

The DPU implemented a performance-based ratemaking (PBR) mechanism that aims to balance funding the replacement of essential aging infrastructure against avoiding the expense of distribution rate cases for the next five years. This mechanism also includes performance scorecard metrics to improve safety, reduce emissions, and enhance customer satisfaction.

A PBR mechanism allows National Grid to concentrate more on its core business functions rather than rate recovery, while it also incentivizes the company to operate its business cost efficiently. Consequently, National Grid will be better able to meet its public service obligations to provide safe, reliable, and least-cost service to customers, and achieve enhanced pipeline safety and emissions reductions targets.

Through today's order, the DPU also approved a cost recovery mechanism for National Grid to undertake preventative repairs to liquid natural gas ("LNG") storage facilities that are essential for the company to meet supply requirements during the winter heating period.

The Order directs National Grid to commit to not revising base distribution rates through a rate case until October 1, 2026.

Under a separate docket, the DPU is conducting a comprehensive investigation into the role of local natural gas distribution companies in the future of the Commonwealth's energy portfolio following the Baker-Polito Administration's determination of net zero greenhouse gas emissions as Massachusetts' legal emissions limit for 2050. As part of the investigation, the DPU will assess the role of gas companies in ensuring a low-carbon future and explore strategies that enable the Commonwealth to achieve net zero greenhouse gas emissions while safeguarding ratepayer interests and securing safe, reliable, and affordable natural gas service.

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