BOSTON — National Grid customers could be digging deeper into their pockets to pay for upgrades to the utility’s aging natural gas system.

The utility’s gas distribution companies, Colonial Gas and Boston Gas, are seeking approval from the state Department of Public Utilities to raise more than $138 million by hiking rates an average of 6.2% for residential users and 13.4% for industrial.

National Grid serves more than 900,000 gas customers in Massachusetts, including tens of thousands North of Boston.

"These additional revenues will support operation and maintenance costs and capital costs associated with investments in the gas distribution system while ensuring safety and reliability of all services," the company said in a recent message to customers.

State regulators held a virtual public hearing on the proposal Tuesday night, where they outlined the company's request and heard from company executives and customers.

Under the proposed increases, residential customers would see annual bills grow $16.55 on average, depending on how much gas someone uses and whether it’s for heat, hot water or other uses, according to the utility’s reports to the state. Commercial and industrial users would see increases of $122.49, depending on their systems.

"I understand that there is never an ideal time to raise rates and we are always mindful of the impact that rate increases have on our customers," National Grid Massachusetts President Marcy Reed said during Tuesday's hearing. "However I am confident that the request ... is necessary to maintain the level of service our customers expect."

This is the first gas rate increase sought by the company since 2017, she said, pointing out that gas distribution rates have remained unchanged since then.

Attorney General Maura Healey, who has opposed rate increases proposed by other utilities, has intervened in the review process. Her office has the authority to seek lower rates or restrictions aimed at shielding consumers from hefty increases.

Healey's office also intervened in National Grid's 2017 request to increase electric rates, convincing regulators to reduce the increase by about $43 million.

Consumer advocates say Massachusetts already has some of the highest energy costs in the nation, and increased gas prices will have a particular impact on low-income households that have trouble making ends meet. The economic fallout of the pandemic has worsened the situation.

"It's really bad timing to be seeking a rate increase," said John Howat, a senior energy analyst at the Boston-based National Consumer Law Center. "There are a lot of people still struggling because of COVID, unemployment remains very high, and many low-income consumers are already in arrears on their utility bills."

Howat said rate increases are also a drag on economic recovery because they make consumers less likely to spend and encourage businesses to hold back on investments.

Utilities are increasingly seeking revenue to pay for projects to modernize aging gas infrastructure, such as fixing leaks, replacing pipes and upgrading systems. Under state law they are allowed to pass those costs onto consumers.

Eversource received approval from state regulators in November 2017 to raise electricity rates by nearly $220 million over five years, including a $37 million increase in the first year. It has 1.4 million customers in the state.

Regulators will hold another virtual public hearing on National Grid’s rate increase request Thursday at 10 a.m. The hearing will be streamed live on the DPU's website.

If approved, the increases would go into effect Oct. 1, 2021.

Christian M. Wade covers the Massachusetts Statehouse for The Salem News and its sister newspapers and websites. Email him at cwade@cnhi.com.

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