Sub Visual



Sarah R. Bratko, Esq. 

Vice President of Advocacy and General Counsel

401-223-1120, ext. 115



Journal Staff Writer


PROVIDENCE, R.I. — National Grid has applied to state regulators to raise natural gas rates in Rhode Island by 16 percent, an increase that would see the typical heating customer pay $10 more a month than expected for the period from April 1 to Oct. 31.

The proposal comes in the midst of a colder-than-usual winter in which Rhode Islanders have cranked up their thermostats and National Grid has been forced to buy more gas on the spot market than projected. With demand spiking across New England, the region’s limited gas supplies have become even more constrained and utilities have had to pay a premium to match customer usage.

To cover the added cost of supply, National Grid is taking the unusual step of asking for a rate adjustment in the middle of the year-long pricing period that started Nov. 1. It has filed for a smaller rate change in Massachusetts.

National Grid buys much of its gas months before it is needed, taking delivery of some of it and storing it, locking in contracts for some and making up the difference on the spot market.

The rates charged by the utility are set prospectively based on estimates of customer usage, weather predictions and market forces for the year ahead. If National Grid’s costs exceed its estimates by 5 percent, it is allowed to go back to the Rhode Island Public Utilities Commission for a rate change to make up for the shortfall.

Based on the increased use this winter, costs are expected to be 6 percent higher over the course of the current 12-month rate period, or $34.5 million. National Grid filed the rate increase with the PUC earlier this month and was scheduled to announce it to the public on Thursday. The change will go into effect only with PUC approval.

The over-run only applies to the cost of gas itself, not any increases in distribution costs. It also does not equate to any profits for National Grid. Under state law, the utility is not allowed to mark up the price of the commodity. The increase amounts to a 16.3 percent mark-up in the rate for gas, which is just one part of a customer’s bill.

National Grid is not seeking to recover the full amount of the cost over-run immediately. The proposed rate increase will raise only $16 million for the company over the seven months starting in April. It will seek to make up the balance in the next rate period, however.

“We’re trying to spread this out,” said David Graves, spokesman for National Grid in Rhode Island. “We’re making sure this isn’t onerous on our customers.”

The change was also proposed starting in April because that is when usage generally decreases as spring comes on, the company said. The typical heating customer in March uses 138 therms of gas, the general measurement for usage, but only 95 therms in April.

So heating bills gradually fall throughout the spring. Even with the proposed rate increase, bills should continue to fall, but the savings will be $10 less per month for that typical customer, equating to $70 in total until rates are reconsidered in the fall.

This is the second consecutive winter in which New England has suffered through restricted gas supplies. The constraints are driven by a surge in the use of natural gas for power generation. In the mid-2000s, coal- and oil-fired power plants in the region were driven off-line by a glut of cheap gas from the Marcellus Shale in Pennsylvania and other areas where deposits were freed by advances in hydraulic fracturing, or fracking.

In New England, gas-fired power generation increased from 15 percent in 2000 to 42 percent in 2012. But as power plants demanded more gas they bumped up against utilities that use the fuel for heating. That has become a serious problem because New England’s pipeline system has restricted capacity. Prices, especially on the spot market, have skyrocketed because of the competition.

At the same time, supplies of liquefied natural gas that are brought into the region by tanker ships have dropped off markedly because European markets are willing to pay double or triple the price, said Elizabeth Arangio, director of gas supply planning for National Grid.

And finally, the unusually cold winter has pushed utilities to buy more gas on the spot market than they planned because of higher usage. Average daily consumption in New England for about the first six weeks of 2014 was up 4.7 percent over the same period in 2013, according to the U.S. Energy Information Administration. In Rhode Island, during the so-called polar vortex in January, gas use over one 24-hour period reached the second-highest level ever for the state and over another 24-hour period reached the third-highest level.

Increased use has meant that National Grid has bought 12 percent of supply so far on the spot market, twice as much as it expected before the winter.

The additional cost of the increased purchases is exacerbated by the high prices of natural gas. The price at the Citygate hub in Boston for the approximately six-week period at the start of 2014 averaged $22.53 per million British thermal units, a record high for that period since at least 2001 and 50 percent higher than the previous record set in 2013, according to the EIA. At times, the price has spiked to $55 per mmBtu.

Concerns are rising about an over-reliance on gas in New England. It is one reason that Governor Chafee and other governors in the region are trying to move forward with plans to import more hydropower from Canada. They have also joined together to solicit proposals to expand the regional gas pipeline system.

“This is an issue on everyone’s minds,” said Michael D. LaFlamme, New England vice president for regulation and pricing at National Grid.

Plans are underway to expand by about a third the capacity of the Algonquin pipeline, one of the two main supply channels to Rhode Island and the region as a whole. That project, which is expected to be completed in 2016, could help ease prices.

But, Arangio pointed out, even after the recent expansion of a supply line to New York City, spot prices there this winter hit a whopping $125 per mmBtu.

“We’re setting records,” she said.

List of Articles
No. Subject Author Date
31 Hotel industry presses for passage of terrorism insurance file Monika Nov 07, 2014
RIHA Signs on to Letter on TRIA The letter proved to be quite timely, as it was sent to the Hill on the same day the Speaker of the House was reported to be leaning toward a short-term extension of TRIA, which would obviously not be an ideal...  
30 2014 Legislative Wrap Up & Legislative Score Card file Monika Jul 03, 2014
This year’s legislative session was a busy one with over 400 pieces of legislation that affected the hospitality industry. Inevitably in politics the odds are against you that you’ll be 100% successful in getting everything you want. However...  
29 It's time for the US Senate to stop Patent Abuse file Monika May 21, 2014
This week RIHA signed on to a letter to Senator Reed and Senator Whitehouse urging immediate action on comprehensive patent reform. This issue has gained momentum this year as the public spotlight focused on the unfairness and inequity of p...  
28 Local Minimum Wage Battles Fought Around the Country Monika May 14, 2014
As you know, Providence City Council is currently deliberating an increase to $15 per hour for hotel workers. RIHA is actively developing a strategy to fight this effort as if it is successful, the continued viability of Providence hotels i...  
27 New information-reporting rules under the Affordable Care Act file Monika Mar 10, 2014
From   New information-reporting rules for many businesses and their insurers are on their way under the Affordable Care Act -- and with less than 10 months to go before data-tracking is supposed to get underway, the impact o...  
26 Meeting with Senator Jack Reed file Monika Feb 28, 2014
This week RIHA hosted Senator Jack Reed at Chelo’s Waterfront Grille in Warwick. As always, our board members were highly attuned to the concerns of the hospitality industry and posed a number of intelligent questions to the Senator. The Se...  
» National Grid seeks 16 percent natural gas rate hike for RI file Monika Feb 28, 2014
By ALEX KUFFNERALEX KUFFNERProvidence Journal Journal Staff Writer   PROVIDENCE, R.I. — National Grid has applied to state regulators to raise natural gas rates in Rhode Island by 16 percent, an increase that w...  
24 I-9 Forms – are you in compliance? Monika Feb 21, 2014
The owners of the Black and Blue Restaurant of Rochester, New York started this New Year by handing $88,700 over to the feds.  Their crime?  Immigrations and Customs Enforcement (ICE) accused the restaurant of failing to prepare I-9 forms f...  
23 National Restaurant Association Urges House Ways and Means Committee to Move Forward on Definition of Full-Time Legislation file Monika Feb 05, 2014
FOR IMMEDIATE RELEASE, February 4, 2014 CONTACT: Katie Laning Niebaum (202) 973-3967 or Christin Fernandez (202) 331-5939 National Restaurant Association Urges House Ways and Means Committee...  
22 Congressional Budget on Obamacare file Monika Feb 05, 2014
THE CBO REPORT THAT BLEW UP THE INTERNET - Twitter exploded yesterday following the release of the Congressional Budget Office report claiming that the Affordable Care Act will likely cause "a decline in the number of full-time-equivalent w...  
21 Arguements for and against raising Rhode Island Minimum Wage file Monika Feb 05, 2014
PROVIDENCE — House lawmakers on Tuesday heard arguments for and against a bill that would raise Rhode Island’s minimum wage to $10 an hour by 2016 and then tie it to inflation starting in 2017. Testifying before the House Labor Committee, o...  
20 RIHA Testifies- Genetically Modified Organisms to be labeled file Monika Jan 31, 2014
RIHA testifies on H 7093- This bill would require that food and food products derived from or containing genetically modified organisms be labeled as such by the manufacturer, retailer or other person before putting it on the market for sal...  
19 Plastic Bag Ban Bill Introduced Again file Monika Jan 31, 2014
Efforts to make Rhode Island the first state with a bag ban recently took a step forward. For the second straight year, Rep. Maria Cimini, D-Providence, has sponsored the Plastic Waste Reduction Act, a bill that would ban retailers from off...  
18 Survey from the Governor's Office file Monika Jan 31, 2014
Please take a few minutes to fill out this survey to insure that we have input from our industry . Dear Business Leader: Please find attached a letter asking for your input on state regulations that may be a burden on your business. To faci...  
17 Candidate Taveras Calls for Increase in Minimum Wage- others join in file Monika Jan 31, 2014
The race for Rhode Island governor turned into something of a race t o be the champion of the minimum-wage increase Thursday among leading Democratic contenders. Providence Mayor Angel Taveras, a Democratic candidate for governor, proposed T...  
16 Probation & Parole offices downtown Providence file Monika Jan 10, 2014
Director Richard A. Licht of the state Department of Administration said that the department will seek fresh proposals to relocate the Office of Probation and Parole rather than move it to a downtown site at 40 Fountain St.   RI Hospitality ...  
15 RI - Labor to lobby for higher minimum wage in R.I. Monika Jan 10, 2014
Rhode Island's minimum wage rose to $8 an hour on Wednesday, but organized labor says it will call on  lawmakers to raise it even higher in the legislative session that opens Tuesday. George Nee, president of the Rhode Island AFL-CIO, said h...  
14 Hospitality - 2014 new legal obligations file Monika Jan 10, 2014
Tip-vs.-wage changes. On January 1, 2014 a new IRS rule took effect regarding automatically added gratuities.  It basically states that any gratuities added to guest checks (such as an 18% gratuity added for large parties) will no longer be ...  
13 RI fast food workers fight for $15 file Monika Nov 22, 2013
  A direct action inside a Wendy's in Warwick today was Rhode Island's first in the nationwide Fight For 15 effort to unionize fast food workers. But it won't be the last, organizers said. Expect more local protests and more fast food worke...  
12 Senate OKs $11-Per Hour Minimum Wag Bill- MASSACHUSETTS Monika Nov 22, 2013
BOSTON -- The Senate voted 32-7 on Tuesday to increase the state's minimum wage by $3 over the next three years to $11 an hour, approving legislation that would give Massachusetts the highest minimum wage in the country. Massachusetts curren...