A message from Ken Daly
I am pleased to report that yesterday afternoon we filed a Joint Proposal with the New York Public Service Commission (NYPSC) that outlines a three-year rate plan for our downstate New York customers, effective January 1, 2017. If approved, this would settle the KEDNY and KEDLI rate case proposals filed on January 29, 2016. This Joint Proposal reflects the opinions and feedback of a number of parties, including the Department of Public Service Staff and other stakeholders, including consumer groups who represent the interest of customers.
As you recall, our original rate case proposals were our first in a decade and asked for an increase in our delivery rates, which are currently significantly lower than 1996 levels in real terms. We filed the new rate proposals because we need to fund the increasing investments in our gas networks in both New York City and Long Island – an expected $3 billion through the end of 2019.
The Joint Proposal would increase delivery rates by $384 million (KEDNY $272 million, KEDLI $112 million) and would be used to make our current gas networks safer, stronger and more reliable. For instance, we plan to replace an accelerated schedule of 585 miles of aging gas pipes in New York City and Long Island through the end of 2019.
Key milestone achieved
The Joint Proposal is another milestone in the rate case proceeding. The Proposal will go through a review period in the coming months, with the NYPSC expected to make a final decision in December or January. We believe the Proposal allows us to meet our customers’ needs now and in the future, including modernizing our gas infrastructure, enhancing safety and reliability, delivering economic and environmental benefits from gas expansion and supporting the local communities we serve. It also manages bill impacts by levelizing the rate increase on an equal percentage basis over three years instead of the one-year rate increase proposed in our original filings. The Proposal also provides eligible low-income customers with increased benefits and contains a framework to identify additional low-income customers to enroll in the Company’s customer assistance programs.
The bill impact for a typical KEDNY heating customer using 1,000 therms on an annual basis in 2017 would be $9.40 per month or 9.4% on the total bill (15.2% on delivery portion) and $6.24 per month or 5.5% on the total bill (9.3% on delivery portion) for a typical residential heating customer of KEDLI. Additional bill increases for 2018 and 2019 would be similar percentages.
It is important to note that the delivery bill increases would be similar percentages for larger customers and that the total bill impact (delivery plus commodity) could be different with natural gas commodity prices continuing to remain low now as they were when we filed in January, and still at a substantial discount when compared to competing fuels.
In addition, we have recently financed the funds required for our capital programs at historically low interest rates – KEDNY in March and KEDLI just a few weeks ago. These financings will save customers nearly $200m over 10 years and are reflected in this proposal.
For more detail on our Joint Proposal, please review the Investor Relations fact sheet.
Thank you to everyone who has supported these proposals and who have met every deadline and request for information. The progress has been substantial; let us keep the momentum going straight through to the NYPSC’s final decision.