AG Healey: Settlement with National Grid protects MA customers from incurring nearly $30 million in extra annual costs

BOSTON – Massachusetts Attorney General Maura Healey announced today that her office has reached a settlement with National Grid that protects customers in Massachusetts from incurring nearly $30 million in extra annual costs on their utility bills as the result of the company’s proposed sale of its Rhode Island utility, Narragansett Electric Company. The settlement will also provide millions of dollars in utility debt relief and customer credits.

The settlement resolves an appeal by the AG’s Office of an order by the Department of Public Utilities in July 2021 that waived a full review of the sale of Narragansett before the sale closed. Last month, the Massachusetts Supreme Judicial Court granted the AG’s request for a stay of the DPU’s order, which resulted in the sale of Narragansett being put on hold.

“Massachusetts families should not be forced to shoulder millions of dollars in extra costs for their utility services from this sale,” AG Healey said. “We are pleased to have secured a resolution that not only protects customers from higher rates but provides additional benefits during a time of need.”

Today’s settlement requires that National Grid either mitigate or absorb a total of $29 million in additional annual costs caused by the sale. If not mitigated or absorbed, Massachusetts customers would have been forced to pay these costs year after year for as long as National Grid serves Massachusetts customers, meaning that the total customer savings secured by the agreement are likely to be in the hundreds of millions of dollars over time.

Under the settlement, National Grid will also provide a one-time $7.9 million credit to customers to account for projected increases in service company costs between the date of the settlement and the DPU’s review of those costs during the company’s next two rate cases. The company will further provide $4 million of debt forgiveness and an additional $1 million to the AG’s Residential Energy Assistance Grant program, which provides funding to state agencies, municipalities and nonprofits that help low-income residents pay their heating bills.

Utility companies that own more than one electric or gas distribution company across multiple states, like National Grid, often provide certain services to all their subsidiary distribution companies through a “service company” to maximize efficiency and save costs. National Grid currently owns electric and gas companies in New York, Massachusetts and Rhode Island and certain services (such as legal, accounting, finance, engineering, customer service and information technology services) and their costs are either covered by the individual company or shared between the subsidiary companies. Massachusetts customers pay for a portion of these shared service company costs in their distribution rates. The AG’s Office argued at the DPU and then on appeal that the loss of Rhode Island as a sharing partner for these costs would result in millions of dollars in additional costs that Massachusetts consumers would ultimately have to pay.

National Grid’s commitments under the settlement agreement become effective only if National Grid closes its sale of Narragansett. The sale is currently being challenged by the Rhode Island Attorney General’s Office.

As the ratepayer advocate for Massachusetts, AG Healey’s Energy and Telecommunications Division works to ensure reasonable electricity and gas prices, access to clean energy for all customers, and to educate them on the available programs to help them keep the lights on and stay warm. This matter was handled by Assistant Attorney General Ashley Gagnon, Division Chief Nathan Forster, Deputy Division Chief Elizabeth Anderson, and Senior Appellate Counsel Seth Schofield.