National Grid receives boost to US operation

WARWICKSHIRE based utility National Grid has been cleared to raise its distribution costs in a key part of its US operation.

National Grid said the move by the Massachusetts Department of Public Utilities (MADPU) was a significant step forward for its gas operation in the region and would generate revenues of around £36m ($58m). The business represents about 10% of National Grid’s US operations.

As part of the revenue requirement, the MADPU approved a return on common equity of 9.75%, as well as a common equity ratio of 50%. The decision will also enable National Grid to recover lost base revenue from energy efficiency and other conservation measures currently impacting on sales volumes.

National Grid will also recover non-controllable cost items such as pension and non-pension-related retirement benefits and the commodity element of bad debts. A capital investment tracker will also allow it to recover capital costs incurred in replacing aging cast iron and bare steel mains in the local distribution system.

“The MADPU decision represents a significant step forward for the Massachusetts gas operations in terms of securing adequate and timely recovery of costs incurred to serve customers on a safe and reliable basis,” said National Grid in a statement.  

“Although the MADPU decision reflects several adjustments to National Grid’s initial proposals, the collective impact of the decision represents a positive step forward for National Grid’s Massachusetts gas distribution operations.”

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