National Grid Reports Incorrectly Charging Basic Service Rate Recalculation to Customers; Also Reports Negligible Annual Impact To Company From Mechanism

The Massachusetts DPU has directed the state's four electric utilities to file information regarding their application of the basic service cost recalculation, including the total amount charged over the past year.

National Grid reported that, for the 12-month period from April 2014 through March 2015, it charged a total of $50,000 to customers under the basic service cost recalculation, which reflects the net impact to all customers from periods in which the adjustment resulted in a charge and other periods in which the adjustment resulted in a credit.

Note that the DPU requested information related to residential and small C&I customers. National Grid, in an explanatory memo, said that its responses reflect residential (R-1,R-2, R-4), commercial (G-1 and Streetlighting) and industrial (G-2 and G-3) customer accounts, though in a spreadsheet attached to its response it did not change the labels provided in a DPU template (which listed the fields as applying to residential and small C&I accounts)

The cumulative impact of this aggregate $50,000 in revenue from the basic service cost recalculation essentially works out to a 0¢/kWh for National Grid (specifically, $0.0000023/kWh), when considered over National Grid's 21,000,000,000 kWh of distribution sales (the use of the distribution metric was requested by the DPU; it seems to us a comparison to basic service sales would be of greater utility).

National Grid also reported that the number of customers who left basic service by month was as follows:

March-14          6,676
April-14         37,528
May-14            3,938
June-14           3,876
July-14           5,174
Aug-14            7,004
Sept-14           5,617
Oct-14            9,962
Nov-14           33,766
Dec-14           32,204
Jan-15           18,242
Feb-15           21,373
March-15         19,928

National Grid was the only utility whose responses to the DPU's inquiry were available as of press time.

National Grid also informed the DPU that it, "recently identified an error that has resulted in certain customers being incorrectly assessed the Market Price Adjustment [basic service cost recalculation] who have not switched from Basic Service to a competitive supplier."

"The Company believes the error began in 2008, when the Company converted to its current billing and customer information system, CSS. The system correctly calculated and reflected the Market Price Adjustment on the bill of a customer who switched to a competitive supplier, but also applied the same adjustment to subsequent accounts in the billing process until a subsequent account with dissimilar characteristics stopped the process. This resulted in some customers receiving the adjustment in error. The Company corrected CSS on March 16, 2015 to cease the misapplication of the adjustment for customers on fixed price Basic Service who did not switch to a competitive supplier. The Company is still assessing the number of customers impacted by this billing error and will provide regular updates to the Department on its progress," National Grid said.