By The Business Review (Albany)

Electric bills for National Gridâ¿¿s commercial and residential customers wonâ¿¿t increase this year even though the Public Service Commission approved a $112.7 million rate increase Thursday.

The utility company, which sought a $391 million rate increase this year, received less than one-third of its request.

That increase, which takes effect next month, wonâ¿¿t impact utility bills until next year. The higher rate will be offset by a one-year delay, during which National Grid will begin recovering expenses related to site investigations, post employment benefits and major storm restoration, according to the Public Service Commission staff.

National Gridâ¿¿s largest commercial and industrial customers also are expected to save 40 percent or more on the delivery portion of their bills starting in 2012. That reduction will kick in when a competitive transition charge portion of National Gridâ¿¿s rate structure expires.

Some large customers could save $200,000 or more, according to one estimate outlined at a PSC meeting earlier this month.

The PSCâ¿¿s decision to grant a smaller rate hike than National Grid requested did not sit well with the utility.

Thomas King, president of National Grid USA, said the commission would make it difficult for the company to cover its operating expenses.

⿿Revenues will not be adequate to cover the costs of providing safe and reliable service to our customers,⿝ King wrote in a letter to the commission dated Jan. 19.

Commissioner Maureen Harris said the thought that National Grid would be unable to provide reliable service concerns her.

⿿That makes me very uneasy,⿝ she said prior to Thursday⿿s vote on the new rate structure.

The PSC also voted to give National Grid an opportunity to earn up to a 9.3 percent return on equity if the company does not file for a general rate increase until Jan. 1, 2012. Otherwise, the return on equity would be 9.1 percent.

National Grid had sought nearly an 11 percent return.

Harris also raised concerns that the PSCâ¿¿s decision might encourage the utility to sell its upstate operations if it wasnâ¿¿t able to generate enough return on its equity.

She questioned whether that was what prompted National Grid to sell its New Hampshire business.

Copyright 2011 American City Business Journals

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