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National Grid NY's Gas Rate of Return on Common Equity: 7.99%

Strategic Insights

— 1 min read

National Grid NY has submitted its computation of gas rate of return on common equity for the rate year ended December 31, 2014, as required by the New York State Public Service Commission. The computed rate of return on common equity for the rate year ended December 31, 2014, was 7.99%. This is below the threshold of 9.40% above which earnings are to be shared between National Grid NY and its customers.

Key Takeaways:

  • National Grid NY's earned return on rate base for the rate year ended December 31, 2014, was 6.23%.
  • The company's earned return on common equity for the rate year ended December 31, 2014, was 7.99%, which is below the threshold of 9.40%.
  • National Grid NY's cumulative earned common equity return for the rate years ended December 31, 2013, and 2014, was 8.18%, below the threshold.
  • The company will allocate 80% of the revenue equivalent of its cumulative earned common equity return in excess of 9.40% as a credit against its SIR deferral balance for the benefit of customers.
  • The Brooklyn Union Gas Company d/b/a National Grid NY has reported operating revenues of $1,550,884 and operating expenses of $1,353,923 for the year ended December 31, 2014.
  • The company's utility operating income was $140,875, and its rate base was $2,260,950.
  • National Grid NY's weighted average cost of capital was 6.91%, and its capital structure consisted of long-term debt, customer deposits, and common equity.
  • The company's earnings sharing threshold was 9.40%, and it will retain 20% of the earnings in excess of this threshold.

Statistics:

  • Earned Return on Rate Base: 6.23%
  • Earned Return on Common Equity: 7.99%
  • Cumulative Earned Common Equity Return: 8.18%
  • Operating Revenues: $1,550,884
  • Operating Expenses: $1,353,923
  • Utility Operating Income: $140,875
  • Rate Base: $2,260,950
  • Weighted Average Cost of Capital: 6.91%
  • Earnings Sharing Threshold: 9.40%

Sources:

  • Joint Petition of National Grid plc and KeySpan Corporation for Approval of Stock Acquisition and other Regulatory Authorizations, Case 06-M-0878.
  • In the Matter of the Commission's Examination of The Brooklyn Union Gas Company d/b/a National Grid NY's Earnings Computation Provisions and Other Continuing Elements of the Applicable Rate Plan, Case 12-G-0544.
  • The Brooklyn Union Gas Company d/b/a National Grid NY, Schedule 1, Page 1 of 7.

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