Approval of two key KEDNY requests is a win-win

Gas crews in the trenchThe New York State Public Service Commission (NYPSC) yesterday approved the extension on our KEDNY (National Grid’s New York City gas business) capital investment tracking mechanism from two years to four years. This will allow us to make nearly $900 million in investments to modernize and increase the resiliency of the natural gas system in the New York City area in 2015 and 2016 without any increase to customer bills.

Among other things, this will help us replace 47 miles of old pipe with new pipe to improve safety, enable more oil to natural gas conversions and reduce methane emissions. This comes 10 months after the Commission approved a natural gas investment program to accelerate the replacement of aging pipelines and expand the use of natural gas on Long Island.

The Commission also approved a petition to permit KEDNY to increase annual collection of its existing SIR (Site Investigation and Remediation) surcharge from $25 million to $62.5 million, an increase of $37.5 million.

The increase will have an average impact of $2.68 per month for KEDNY’s 1.2 million customers, which amounts to $32 per year. Amounts will vary according to customer classification as the surcharge goes into effect November 1, 2015. The overall increase in revenue is under 2.5 percent. These revenues will be used exclusively to pay down the SIR deferred balance.

In its order on the SIR, the Commission stated: “The Company has implemented cost control measures by following industry best practices and utilizes competitive bid procedures where it is reasonable to do so in order to keep costs down. KEDNY also continues to offset its SIR expenses by obtaining cost recoveries from potentially responsible third parties and insurers.”

KEDNY’s SIR activities are primarily directed and controlled by the New York State Department of Environmental Conservation (DEC) and Environmental Protection Agency (EPA). Costs are driven by the company’s need to comply with applicable laws, regulations and orders issued by the DEC, EPA and other regulatory authorities. KEDNY is responsible for the investigation and remediation costs for 28 former Manufactured Gas Plant (MGP) sites.

Win-win for customers

“This is very good news for our customers and our local gas infrastructure,” says Ken Daly, New York President. “The PSC approval of our $900 million capital investment plan allows us to accelerate our existing pipeline replacement program, deploy new gas main inspection and repair technologies, and provide additional clean, natural gas to more customers in our New York City service area.

“In addition, the approval of our SIR petition allows us to continue to address environmental impacts and recover the significant investments we have made on behalf of our customers, while at the same time minimizing bill impacts.”

Continuing our overall regulatory strategy in downstate, we will file rate filings for KEDNY and KEDLI (our Long Island gas business) in January 2016.

If you’ve missed it, have a look at our Downstate New York overview video:

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