August 14, 2009
By: by Larry Rulison, Business Writer, Times Union
ALBANY -- Although National Grid PLC will likely seek a rate hike next year, Chief Executive Steve Holliday says the company wants its customers to reduce their usage, and their bills.
Holliday, who spends one week of every month in the States, will speak at an energy forum this morning at the University at Albany's College of Nanoscale Science and Engineering.
In an interview Wednesday at National Grid's regional headquarters on Broadway in Albany, Holliday said the United Kingdom-based utility is pushing for changes in the New York regulatory environment that will drive conservation and improve efficiency of the electric grid.
That includes pursuing a "decoupling" of utility revenues from energy usage volumes -- a method that has already been adopted in Holliday's native United Kingdom.
Under the current system in New York, there is no incentive for utilities to encourage energy conservation. But through decoupling, utilities would be able to make up for lost revenue by being rewarded for encouraging energy efficiency and a reduction of usage. The idea is especially intriguing in New York, where Gov. David Paterson is seeking to reduce electric usage by 15 percent by 2015.
"We want to be a part of that solution working with the regulators," Holliday said.
The global recession has hurt revenues for utilities like National Grid, and an article in Wednesday's Wall Street Journal says that electricity demand in the eastern U.S. fell 4.4 percent during the first half of the year.
Holliday says that doesn't help the bottom line, but it's an opportunity for the utility to focus on conservation and efficiency that will keep demand level and help the company maintain the reliability of the system in the future.
"It (the recession) does hurt the business," Holliday said, "But we don't want (electricity usage) to grow anymore."
The growth in the need for more electricity and the aging of the transmission and distribution system in the Northeast has forced National Grid to pour huge amounts of capital into its infrastructure. The company is spending $2.5 billion on improvements to its transmission and distribution system in New York state over the next five years.
Holliday says the utility will file a new rate plan next year that will replace its current 10-year plan, which expires at the end of 2011. Like other rate plans filed recently by utilities, this one will likely request an increase in delivery rates.
Holliday is also excited about National Grid's $290 million proposal to test "smart grid" technologies in both Syracuse and the Capital Region. The utility is seeking half the cost from the federal stimulus program. If successful, such "smart grid" programs would help customers cut their usage and bills by allowing them to use their appliances when energy is cheapest.
"These are two very good pilots," he said. "I think it will be very good for the state of New York and National Grid."