New York

State Profile
19,795,791
26
Utility Revenue (Millions) $4,395.70
$4,192.70
n/a
$108.60
$94.40
Consumption (Billion Cubic Feet or BCF)

Consumption by Sector In-State

25,072
1,343
452
311
83
497
Customers 4,842,787
4,439,101
397,656
6,030
Industry Infrastructure
104
18
51,907
Utility Gas Efficiency Program Funding $118,431,912.00
$29,423,973.00
$49,873,397.00
$26,465,988.00
$12,668,554.00

Sources

AGA Survey and Statistics System; AGA-CEE Natural Gas Efficiency Programs Survey: Utility expenditures for gas efficiency programs exclude data that have not been released by participating companies at the state level; U.S. Energy Information Administration; and U.S. Department of Transportation.

Statewide Elected Officials Next Election: 2018
Andrew Cuomo (Dem.)Governor
Kathy Hochul (Dem.)Lieutenant Governor
Eric Schneiderman (Dem.)Attorney General
Legislature Next Election: 2018Session Dates: 1/6/2016 - 1/2016
Senate
Term: 4 year
President: Robert Duffy
President Pro Tempore: Dean Skelos
Senate Majority Leader: John Flanagan
Senate Minority Leader: Andrea Stewart-Cousins
Senate Member Breakdown
Democrats: 24
Republicans: 31
Ind.: 8
State Assembly
Term: 2 year
Speaker of the Assembly: Carl Heastie
Speaker Pro Tempore of the House: Jeffrion Aubry
Majority Leader: Joseph Morelle
Minority Leader: Brian Kolb
State Assembly Member Breakdown
Democrats: 107
Republicans: 42
Ind.: 1
New York State Public Service Commission Commissioners: Gubernatorial appointment, Senate confirmation: 6 year termChairperson: Appointed by and serves at the pleasure of the Governor: Indefinite term
Current Commissioners:
Audrey Zibelman, Chair Appointed as Commissioner by Governor Andrew Cuomo in June of 2013; Named Chair by Governor Cuomo in September of 2013
Patricia L. Acampora (R), Commissioner Appointed by Governor George Pataki in 2005; current term ends in 2015
Gregg C. Sayre (D), Commissioner Appointed by Governor Andrew Cuomo in 2012; term ends in 2018
Diane X. Burman (R), CommissionerAppointed by Governor Andrew Cuomo in 2013; term ends in 2018

Central Hudson Gas and Electric Corp offers a special rate designed to incentivize Distributed Generation, including CHP. ConEd offers a special rate designed to incentivize CHP applications. Orange and Rockland Utilities offers a special rate designed to incentivize CHP applications. In its New York Metro Territory, National Grid offers custom Incentives for CHP projects that demonstrate the use of natural gas more efficiently than industry practices and/or more efficiently than the minimum building code requirements. Incentives are available covering up to a maximum of 50% of project costs, capped at $250,000 per site and/or per project. In its Upstate New York Territory, National Grid offers Custom incentives are available covering up to a maximum of 50% of project costs, capped at $100,000 per site and/or per project. New York State Energy and Gas (NYSEG) and Rochester Gas & Electric (RG&E) Commercial and Industrial Rebate Program offers custom rebates to qualifying non-residential customers who install energy efficiency measures that are not covered by the prescriptive applications. Customers using distributed generation (DG) including CHP may qualify for discounted natural gas delivery rates. CHP systems must have a dedicated gas line to enjoy these benefits. The Commission first approved the National Fuel's DG program effective March 20, 2003 (Case 02-G-0858). The program is designed to improve a customer’s project economics by reducing the project payback through a one-time payment or buy down toward the cost of the DG installation. The Company recovers the customer buy down through future incremental transportation or sales service charges. This assures that buy down costs will be borne by the DG customers on a project-by-project basis. In accordance with the Order, the Company has implemented this program on a pilot basis over a three-year period. The program has an annual buy down cap of $1,000,000 per year, for a total program cap of $3,000,000. National Fuel expects that typical buy downs per customer will be in the range of $50,000 to $150,000. All participating customers must sign a performance contract with a term of up to six years and may be required to provide security to cover the Company’s buy down amount. This program was been reauthorized in 2006, 2009 and 2011 and is currently up for reauthorization in docket number 14-G-0551.

In early 2013, the New York PSC initiated a technical conference on policies pertaining to expansion of natural gas service pursuant to the recommendation for fuel switching to natural gas in Governor Andrew Cuomo’s Energy Highway Blueprint. In January of 2014, the New York State Energy Planning Board released a draft 2014 New York State Energy Plan. Initiative 9 of this draft plan provides for the following: The state aims to reduce reliance on petroleum products for heating buildings by supporting the use of clean alternatives to heating oil and expanding access to natural gas in the near term while pursuing strategies to reduce natural gas leakage; Instructs the DPS to encourage and support oil-to-gas conversions by collaborating with other State agencies and regulated gas utilities to accelerate investments in natural gas distribution; Instructs DEC to evaluate regulations to limit methane emissions from natural gas compressor stations on intrastate pipelines; Instructs NYSERDA to support economic and efficient clean heat options as alternatives to fossil fuel consumption, including solar thermal, geothermal, and the use of sustainably harvested biomass and advanced heating systems; Instructs DEC, DOH, and NYSERDA to support research to enable the quantification of public health benefits to be incorporated into energy planning and policies. As well, five New York cities (Albany, Buffalo, Rochester, Syracuse and Yonkers) are in the process of putting together the Five Cities Energy Master Plan, an initiative being coordinated and led by the New York Power Authority (NYPA) as part of the Build Smart NY program. Goals of the initiative include reducing the cities’ energy consumption, strengthening reliability of each city’s energy infrastructure, creating jobs in local clean energy industries and contributing to a cleaner environment.

New York’s energy efficiency programs are the result of New York Public Service Commission (PSC) Opinion No. 96-12 from Cases 94-E-0953 et al. Customers pay a non-bypassable system benefits charge (SBC) on their utility bills, and the SBC is applied to all customer bills whether they receive service from a local utility or from a competitive supplier. The charge supports a comprehensive set of energy efficiency programs for residential, multifamily, low-income, and commercial/industrial customers, as well as research and development efforts in both the Commission’s Technology & Market Development (T&MD) and Energy Efficiency Portfolio Standard (EEPS) programs. The PSC's Opinion No. 98-3, issued on January 30, 1998, specified initial SBC funding levels, funding period( July 1, 1998, to June 30, 2001) and named NYSERDA as the PSC's third-party, independent SBC administrator. The SBC has been re-authorized four times since 1998, most recently in October 2011 when the PSC approved a new, five-year (1/1/12 to 12/31/16) SBC program or SBC IV valued at $469 million for a suite of energy-related technology and market-development programs to be administered by NYSERDA. The PSC’s extension of the SBC program for testing, developing and introducing new technologies, strategies and practices that build the statewide market infrastructure to reliably deliver clean energy to New Yorkers. As the current iteration of the SBC is scheduled to expire in 2015, it is expected that there will be some revisions to the programs funded by the SBC leading up to that time. On August 22, 2008, in Case 07-M-0548, the PSC issued an order establishing utility financial incentives for energy efficiency. These incentives were re-established with a March 22, 2012 Order in the same docket. This order set the current utility incentives including a $14 million “incentive pool” for gas utilities. Incentive pools are divided into two sums. Under Step One (90% of pool funds), each utility will have the opportunity to earn an incentive if it reaches 100% of its aggregate target, for years 2012-2015, by the end of 2015 (calculated on a commitment accrual basis). The amount it can earn would be its proportional share of Step One. Awards begin at zero for 80% achievement and are graduated on a straight line basis to 100% awarded for achievement of 100% of the aggregate target. Under Step Two (10% of funds), all utilities will earn an incentive if the entire statewide jurisdictional goal (including NYSERDA’s share) is achieved by 2015. The amount for each utility would be its proportional share based on its share of the utilities’ aggregate targets. If the statewide goal is not reached, no utility receives an incentive from Step Two. Awards are graduated from 80% to 100% achievement, as they are for Step One. Awards are granted either to all utilities or no utilities, depending on achievement of statewide goals.

In April 2011, the New York Department of Environmental Protection (DEP) issued regulations that require buildings to convert from heavy forms of heating oil (No. 4 and No. 6) to cleaner fuels, including natural gas, beginning in July 2012. The goal of NYC Clean Heat is to encourage and assist buildings in converting to the cleanest fuels possible. The program provides resources to help buildings to convert. Through the Clean Heat Program, Con Edison and National Grid offer the following incentives: Con Edison offers customized plans to assist current and potential customers with capital investments necessary to convert to natural gas. As part of that offering, a single family dwelling may qualify for a conversion rebate of up to $2,000 and an equipment rebate of up to $1,000 while a multifamily building may qualify for a conversion rebate of up to $22,500 and an equipment rebate of up to $15,000. National Grid offers incentives for customers of up to 50% when they convert from oil to gas heat and install a new high efficiency gas heating system. The company offers low interest financing on the conversion cost. In 2012, St. Lawrence Gas broke ground on an expansion project that will connect as many as 4,000 new customers. The project consists of 48 miles of high pressure transmission lines that connect Norfolk to Chateaugay. This project is funded with grants from Franklin County, an appropriation from Senator Betty Little, a grant from the Empire State Development Corporation’s Regional Blueprint fund, as well as PILOT agreements with both St. Lawrence and Franklin counties. In early 2013, the New York PSC initiated a technical conference on policies pertaining to expansion of natural gas service pursuant to the recommendation for fuel switching to natural gas in Governor Andrew Cuomo’s Energy Highway Blueprint. The New York legislature is currently considering legislation that will enact provisions to provide for and assist in the expansion of natural gas service in the state for environmental and economic benefit; Specifically the legislation attempts to do the following: Streamlines the permitting process for distribution infrastructure by requiring the PSC to facilitate contacts with state agencies and local governments with respect to the review of permit applications; Require 25% of the revenue generated by the SEC surcharge (system benefit charge collected by utilities from heating customers) be dedicated to a revolving loan fund for conversions; Mandates the Commissioner of General Services undertake a study on conversion to natural gas heating when a public building requires installation or retrofit of a boiler for heating; Establishes a natural gas expansion mitigation fund to be comprised of RGGI monies to be used for a revolving loan fund for consumers converting to natural gas; Provides taxpayer credit for purchase and installation of a natural gas service system; Credit is 50% of the cost of purchase and installation, capped at $52,750. In January of 2014, the New York State Energy Planning Board released a draft 2014 New York State Energy Plan. Initiative 9 of this draft plan provides for the following: The state aims to reduce reliance on petroleum products for heating buildings by supporting the use of clean alternatives to heating oil and expanding access to natural gas in the near term while pursuing strategies to reduce natural gas leakage; Instructs the DPS to encourage and support oil-to-gas conversions by collaborating with other State agencies and regulated gas utilities to accelerate investments in natural gas distribution; Instructs DEC to evaluate regulations to limit methane emissions from natural gas compressor stations on intrastate pipelines; Instructs NYSERDA to support economic and efficient clean heat options as alternatives to fossil fuel consumption, including solar thermal, geothermal, and the use of sustainably harvested biomass and advanced heating systems; Instructs DEC, DOH, and NYSERDA to support research to enable the quantification of public health benefits to be incorporated into energy planning and policies. In March of 2015, Sen. Griffo (R) introduced SB 4211. This bill would provide number incentives for the extension of natural gas, including tax incentives for companies wishing to extend service, expedited permitting and a surcharge to collect no less than $50 million per year collected by gas corporations and combination gas and electric corporations from their gas customers. These funds must be used for the support of construction of infrastructure designed to extend the supply of natural gas from existing large capacity infrastructure to areas presently not served by natural gas infrastructure supply, including but not limited to new industrial (especially manufacturing), commercial, residential or public end-use customers of a gas corporation or combination gas and electric corporation providing service in New York state with such new customer's consent. On May 15, 2015, the New York PSC approved the Partnership to Revitalize the Industrial Manufacturing Economy of Western New York (Prime-WNY) Program for National Fuel Gas Distribution. The Prime-WNY Program will utilize shareholder funding to incent large commercial and industrial customers in the National Fuel service territory to install incremental gas-fired equipment at their existing facilities. On May 20, 2015, RGE and NYSEG filed rate cases in which the combined companies proposed to accelerate the removal of leak prone gas main removal and bring natural gas service to unserved communities. NYSEG will be implementing a Neighborhood Expansion Pilot Program and a Community Expansion Pilot Program in 2015 and RG&E is considering implementing similar Neighborhood and Community Expansion Pilots. The Companies also propose a Community Development Fund Pilot Program. The Neighborhood and Community Expansion Pilot Programs involve new processes that are designed to make it easier for customers to understand expansion possibilities and significantly speed up the time involved in developing a project while providing greater price certainty to customers. On June 15, 2016, the New York State Public Service Commission (PSC) approved two pilot programs for NYSEG and RG&E. Per the PSC order, NYSEG will continue to implement its Community Expansion Pilot Program under which the company will test a community expansion approach that will provide a fixed surcharge quote for a project. During the development period for prospective projects, NYSEG will develop a fixed surcharge quote based on a forecast of customers that it anticipates would connect over the ten-year surcharge period for the project. Therefore, potential customers will know the surcharge amount before committing to take natural gas service and will have the option to pay upfront or monthly. The Commission also approved a Community Development Fund Pilot Program for NYSEG and RG&E. Under this program, NYSEG and RG&E will implement a Community Development Fund Pilot Program which will establish a community development fund dedicated to the expansion of natural gas to communities where either no approved gas franchise exists or where there is an existing approved franchise, but no gas infrastructure (gas main extension). The Fund would match funding provided by local, regional, and / or state agencies to offset the capital costs to construct natural gas infrastructure in a community. This program has the potential to increase the construction of natural gas infrastructure by lowering surcharges to customers and increasing the likelihood that a project will be economically viable by the end of the development period. This will be a two-year pilot program with a fund of $300,000 for NYSEG and RG&E, both with a maximum matching fund contribution of $100,000 per project. Any unspent funds in a given year will be carried forward to the next year throughout the duration of the program. Any funds not spent when the pilot program ends would be returned to customers through a reconciliation mechanism. On August 3, 2015 State Senator Griffo (R) introduced SB 6024. This bill aims to extend natural gas service to unserved areas. Under this bill, no later than January 1, 2016 or sixty days after the effective date of this section, whichever is later, each natural gas distribution company shall file a petition with the commissioner proposing a pilot or permanent program, including any necessary tariffs, to extend natural gas distribution service for endusers to unserved or underserved areas within its certificated service territory. A proposed program shall include: (a) a process for managing and prioritizing customer requests from end-users for extensions of the natural gas distribution system; (b) a cost-benefit analysis to determine if a customer contribution is required; (c) a method for determining the amount of a required customer contribution in aid of construction; (d) a program to enhance the affordability of required contributions in aid of construction to customers, including the following provisions: (i) the program shall provide for on-bill financing for a term of no less than five years; (ii) a customer shall be able to pay a required customer contribution in full at any time, without incurring penalties or fees; and (iii) the form of financing may include a surcharge, third-party financing or any other method of recovery approved by the commission; (e) a provision outlining whether and how refunds or credits will be provided to customers as other customers receive service from a completed distribution system extension project; (f) a provision addressing the treatment and eligibility of customers participating in a customer assistance program who request and receive service from a distribution system extension project; (g) a provision addressing situations where a customer fails to pay a required surcharge or other on-bill financing mechanism; (h) a customer's natural gas distribution service shall not be terminated solely for nonpayment of a surcharge or other on-bill financing mechanism; and (i) any other provisions that will promote economic distribution system extension to end-users in unserved and underserved areas in a manner that is affordable to customers. On January 29, 2016, Consolidated Edison (ConEd) filed a base rate case with the New York Public Service Commission. In its’s proposal, ConEd plans to proactively develop a plan to identify commercial non-gas heating customers and evaluate the system impact of converting such customers based on estimated conversion loads. There are a significant number of commercial and multi–family homes in Westchester that are not using gas for heating purposes. The company is seeking to implement a plan that evaluates geographic areas and focuses on the conversions of these large multi-family and commercial customers. The secondary benefit will be the conversion of 1-4 family homes that express an interest in converting at the time of this coordinated approach. The resulting area reinforcement work performed will also allow the company to accommodate future conversion requests. The Westchester expansion initiative differs from Clean Heat in that there is no single, readily accessible database of #4 oil #6 oil users in Westchester County. Instead, the company will develop estimates of the potential usage for commercial non-gas heating loads and its impact to its system. The assumption is that these potential customers are using some form of heating source other than gas (e.g., #2, #4, #6 oil, or propane). The company has identified the infrastructure and costs required to support the significant demand associated with adding these commercial customers to its system. A preliminary list of area projects and specific locations has also been identified. The company plans for its marketing team to reach out to the community and municipality to solicit interest. This proposal is presently pending. In its January 29, 2016 base rate filing, National Grid outlined a proposal to assist low-income customers who wish to convert to natural gas from an alternate fuel, National Grid is proposing a new low-income conversion rebate program. Up to 100 customers participating in its Reduced Residential Rate programs would be entitled to receive a rebate of up to $7,500 if they convert their homes to natural gas and install efficient heating equipment. In addition, to assist low income customers in managing their energy usage, the company’s Long Island division proposes to supply them with smart, programmable thermostats at no cost to them. These programs would enable low income customers to realize ongoing fuel savings that are associated with converting to natural gas heat and provide them more control in managing their energy usage. The company also proposed a new program to assist Long Island customers with upfront conversion costs by offering a rebate of $1,000 to each new customer who agrees to take service along the route of a planned main replacement. By coordinating gas connections with main replacements, this program will encourage more efficient growth by reducing the number of road openings, repaving and permitting costs and traffic disruptions compared to typical service installations. The company is also proposing to extend KEDLI’s Neighborhood Expansion Program, which allows customers in neighborhoods with promising growth potential to have KEDLI expand its network to serve them without requiring contributions in aid of construction. This program uses advanced data modeling to identify prospective customers. This program will begin in East Hills, Long Island and install more than 11 miles of new main, convert 1,000 residents from oil to gas and bring $1 million in energy savings. A similar expansion is targeted for Mastic Beach in Suffolk County. The Neighborhood Expansion Program was approved by the Commission as a pilot program on July 28, 2014 in Case 12-G-0202. This proposal is presently pending.

Corning Natural Gas has had a limited pipeline replacement cost recovery mechanism since 2006. National Grid Long Island has had a limited infrastructure replacement tracker program since 2008. The program allows the utility to track only the costs of new or replacement infrastructure that are necessitated by city and state construction projects; National Grid NYC has a similar infrastructure replacement tracker that covers only those costs that are necessitated by city and state construction projects. National Grid (NYC) uses a risk based prioritization model to identify and rank segments of Leak Prone Pipe (LPP) to be removed from service. The Company will target LPP removal from service of 85 miles in CY 2013 and CY 2014, with a minimum of 40 miles during each calendar year, including at least 10 miles per year outside of City/State Construction-driven work. The Company will incur a negative revenue adjustment of 8 basis points should it fail to remove from service a minimum of 40 miles of LPP in each of CY 2013 and CY 2014 or a cumulative two year total of 85 miles of LPP by the end of CY 2014. On September 10, 2010, The New York PSC approved a leak prone replacement schedule for New York State Electric and Gas (NYSEG) and Rochester Gas and Electric (RGE). The schedule requires that NYSEG replace a minimum of 24 miles of leak prone main per year and a minimum of 1200 leak prone services per year. RGE shall be required to replace 24 miles of leak prone main per year and 1000 services. National Grid Niagara Mohawk has had a limited pipeline replacement cost recovery mechanism since 2008. The limited program was scheduled to run for 5 years. National Grid Niagara Mohawk uses a risk based prioritization model to identify and rank segments of Leak Prone Pipe (LPP) to be removed from service. The Company will target LPP removal of 35 miles in CY13, 40 miles in CY14 and 45 miles in CY15. The Company will incur a negative revenue adjustment of 8 basis points should it fail to remove from service a minimum of 35 miles in CY13 and 35 miles in CY14 or a cumulative three-year total of 120 miles by the end of CY15. On May 8, 2014, The New York PSC authorized a leak-prone pipe (LPP) removal plan for National Fuel Gas Distribution Corp. The Company will continue to use its risk based prioritization model to identify and rank segments of LPP to be removed from service. The Company will target removal from service of a cumulative total of leak prone pipe of 190 miles over CY 2014 and CY 2015, with a minimum of 90 miles removed in each year. In February 2014, the New York PSC approved a multi-year Joint Proposal (JP) that resolved all issues in Consolidated Edison’s (Con Ed) gas delivery rate proceeding. The JP provided for the following gas related expenditures relating to storm hardening which will allow Con Ed to modernize its system at an accelerated pace: Rate Year 1: $524.2 million of which $5.021 million will go toward storm hardening; Rate Year 2: $586 million of which $36.459 million will go toward storm hardening; Rate Year 3: $627 million of which $56.942 will go towards storm hardening Con Ed has approximately 1,100 miles of cast iron and bare steel pipe in their inventory in the state, and they replaced approximately 13-20 miles per year over the last four years. Under the new program outlined above, the company will replace 60 miles in 2014, 65 miles in 2015, and 70 miles in 2016. In June of 2014, National Grid petitioned the Public Service Commission to accelerate the replacement of leak prone pipe on Long Island. On December 11, 2014, The PSC ordered the company to accelerate the annual pace of this program to 77.5 miles in 2015 and 95 miles in 2016 to improve public safety and system performance. In its 2014 rate case, Orange and Rockland proposed to expand its current gas infrastructure replacement program so as to remove a total of 100,000 feet of main annually. In order to eliminate all low pressure mains in six years, the Company proposes to replace annually a minimum of 10,000 feet of low pressure mains. Orange and Rockland also proposes to replace an additional 500 bare steel services annually, as part of the Company’s ten year program to remove all bare steel services in its service territory. On October 15, 2015 the New York Public Service Commission (PSC) adopted a multi-year Joint Proposal (JP) in Orange and Rockland Utilities' (ORU) gas rate proceeding. The approved JP establishes funding for the removal of 21 miles, 22 miles, and 23 miles of leak prone pipe in RY1, RY2, and RY3, respectively, with annual reporting by O&R on the status of its leak prone pipe replacement efforts. The JP also allows a negative revenue adjustment if the Company fails to replace at least 20 miles of leak prone pipe in any calendar year. The JP recommends a total negative revenue adjustment of up to eight basis points, rather than continuation of the current level of six basis points, which was initially recommended by Staff in its pre-filed testimony. The approved JP also provides for an incentive mechanism for incremental replacement of leak prone pipe above the amounts provided for in base rates. This mechanism will allow for a positive revenue adjustment equivalent to two basis points for each whole incremental mile of leak prone main replaced in any calendar year above the targets provided for in base rates, up to a 10 basis point cap. ORU could recover the cumulative incremental revenue requirement for such costs through the Reliability Surcharge Mechanism, provided the company had also met its other targets for net plant under the approved agreement. In a February 2015 Joint Proposal, Central Hudson Gas and Electric proposed a leak prone pipe replacement program that would allow for up to $1.4 million in deferred costs for every mile over 13 miles in 2016, up to $1.5 million for every mile over 14 miles in 2017, and up to $1.6 million for every mile above 15 miles in 2018. For the avoidance of doubt, the Company is expressly authorized to include Leak Prone Pipe eliminations (abandonment, disuse or any other method that terminates use of the Leak Prone Pipe while still serving the customer) in this deferral mechanism. In the event the Company replaces or eliminates Leak Prone Pipe in excess of its mileage target in any calendar year, for each mile in excess of the applicable target, the Company shall receive a positive revenue adjustment of 2 basis points per additional mile, capped at a maximum of 5 miles (10 basis points) per calendar year, which the Company will defer for future recovery. This proposal was approved on June 17, 2015. On April 17, 2015, The New York PSC issued an order instituting a proceeding to implement a cost recovery mechanism to further accelerate the replacement of leak prone pipe. The Commission’s stated goal will be to reduce the statewide average replacement timeline to 20 years. On May 20, 2015, RGE and NYSEG filed rate cases in which the combined companies proposed an acceleration of leak prone gas main removal. The Companies propose to increase the leak prone main replacement target from 24 miles in 2016 to 26 miles in 2017, and to 28 miles each year thereafter. The combined annual cost is estimated to be approximately $27 million in 2017. Based on the increased miles, the Companies estimate that it will take approximately 11 years (a two year acceleration), beginning in 2016 to replace all of their leak prone gas mains. This proposal was approved on n June 22, 2016. In its January 29, 2016 rate filing for its Brooklyn and Long Island service territories (BUG and KEDLI, respectively), National Grid outlined a proposal targeting the replacement of more than 300 miles of Leak Prone Pipe (LPP) over a five-year period (2017 through 2021). In recognition of the unprecedented incremental work associated with the company’s accelerated main replacement targets, and to allow the company to begin recovering the actual costs of the accelerated replacement of LPP as the work is completed, the Company proposed a Gas Safety and Reliability Surcharge under which the Company would be allowed to recover a return on investment, depreciation expense and related O&M expense (i.e., disconnects and reconnects) associated with prudent investment in LPP replacement incremental to the level funded in base rates. Provided the Company exhausts its rate allowance for LPP replacements, incremental investment in LPP above the base level of 50 miles in any calendar year, in an amount not to exceed the company’s average cost of main replacement for comparable pipe materials, sizes, strata (e.g., pavement, grass) and working conditions, would be included in the Gas Safety and Reliability Surcharge. Additionally, with regard to the LPP performance metric, BUG and KEDLI propose a negative revenue adjustment of eight pre-tax basis points if they fail to remove their Base LPP Targets of an average of 50 miles per year and 115 miles per year, respectively, over the next three years. The targets would have annual and cumulative targets similar to KEDNY’s current LPP metric in Colander years (CY) 2013 and 2014. That is, KEDNY would incur a negative revenue adjustment in each year for failure to replace a minimum of 45 miles in CYs 2017 and 2018, and a minimum cumulative three-year total of 150 miles for CYs 2017 to 2019. KEDLI would incur a negative revenue adjustment in each year for failure to replace a minimum of 105 miles in CYs 2017 and 2018, and a minimum cumulative three-year total of 345 miles for CYs 2017 to 2019. Any replacement miles recovered through the Gas Safety and Reliability surcharge would not count toward the cumulative CY 2019 target. On December 15, 2016, the New York Public Service Commission (PSC) approved a three-year joint proposal (JP) for National Grid in the above-referenced matter which establishes a Gas Safety and Reliability Surcharge (GSRS) allowing the companies to recover (1) a return on investment, depreciation expense, and O&M expense for disconnects and reconnects of service lines with respect to incremental Leak Prone Pipe (LPP) replacements above the levels funded in base rates; (2) the cost to repair up to 250 incremental system leaks a year in excess of their applicable leak reduction targets; and (3) any positive revenue adjustments earned for LPP productivity, LPP removals and leak repairs. For each mile of LPP removed above the levels funded in base rates, the GSRS will allow the companies to recover the associated revenue requirement calculated as the lesser of the Companies’ average capital and O&M replacement cost per mile of LPP in the Rate Year, or 102% of the capital and O&M unit cost allowances for LPP replacement in the Rate Year. The GSRS will be a per therm surcharge that will appear on a GSRS Statement to be filed with the PSC annually on March 15th. The GSRS would be collected in the delivery rate adjustment (DRA), and would be reconciled annually and included in the DRA from firm sales and firm transportation customers beginning April 1st of the following Rate Year. Additionally, under the approved JP, BUG will be subject to minimum LPP removal targets of 50 miles in Calendar Year (CY) 2017, 55 miles in CY 2018, or a cumulative three-year total of 180 miles by the end of CY 2019. KGE will be subject to minimum LPP removal targets of 105 miles in CY 2017, 125 miles in CY 2018, or a cumulative three-year total of 405 miles by the end of CY 2019. The removal targets in the Joint Proposal represent a compromise between the slightly lower levels generally proposed by the companies and the slightly higher levels generally proposed by Staff.

On November 17, 2011, the New York Public Service Commission approved a National Fuel Gas Distribution Corp. (NFDC) partnership for natural gas vehicles pilot program, an effort to try to cut back on the use of imported gasoline. The commission stated that development and growth of NGVs can improve the state's energy profile, but the barriers to entry require creative solutions. The $3.5 million program is designed to encourage the installation of NGV facilities and vehicle purchases. The PSC expects the program to demonstrate the economic feasibility and impacts on utility infrastructure of NGVs. NFDC outlined in its filing that up-front costs for NGVs can be substantial, and refueling stations also can prove to be a significant cost, ranging from $100,000 to $1.5 million. The pilot program provides a one-time credit for a refueling station and/or the purchase of NGVs. The credit will be paid for through future sales paid by customers. On May 15, 2015, this program was reauthorized through March 31, 2018. In its Long Island territory, National Grid has multiple CNG rate schedules in its tariff (SC-9, SC-10 and SC-11) for NGVs for stations owns and operated by the company. The company owns 8 stations in the state which are managed by Clean Energy. Under the terms a 2010 management agreement, Clean Energy operates and maintains the National Grid stations, sells CNG to third parties, upgrades the onsite equipment to increase vehicle fueling capacity for the growth of the National Grid CNG truck fleet, and works with National Grid to continue the growth of the CNG vehicle market. Con Edison owns a network of CNG stations in New York and has a Natural Gas Vehicle rate schedule (SC No. 14) in its tariff. Integrys Energy Group subsidiary Trillium CNG owns and operates stations in Kirkwood, West Babylon, Vestal and New York City (Bronx). In order to support the development of compressed natural gas (“CNG”), in its 2014 rate case, Orange and Rockland is proposing to construct and operate a CNG fueling depot with fast fill dispensing at the Company’s Spring Valley operating center. The installation of this infrastructure will allow the Company to replace a portion of its vehicle fleet with CNG fueled vehicles, thereby reducing operating costs, and could also be available to support fleet customers interested in CNG. On October 15, 2015, the New York Public Service Commission issued an order adopting a joint proposal in Orange and Rockland’s base proceeding. With regard to the market for compressed natural gas (“CNG”) or liquid natural gas (“LNG”) fueling in Orange and Rockland’s service territory, the Company will meet with Staff and other interested parties within 90 days of the date of the Commission’s final rate order in these proceedings. At that meeting, the parties will discuss what market research the Company has done, and what market research the Company believes is necessary to further the development of this market. Further, at that meeting, the parties will discuss and identify what information will be required in a strategic plan for the development of this market beyond the Company’s own fleet of vehicles. The Company shall then develop and file the strategic plan with the Secretary within 180 days of the date of the Commission’s final rate order in these proceedings. In its January 29, 2016 base rate filing for its Brooklyn Division, National Grid proposed an incentive for customers to buy natural gas vehicles to make more efficient use of existing infrastructure. The company proposes to provide customers that acquire a new NGV and fuel at a CNG station served by its Brooklyn division with a credit at the end of the first year’s operation of each new NGV. The credit would be individually negotiated with CNG customers but would be capped at $0.80 per gasoline gallon equivalent (“GGE”) delivered to the new NGV in National Grid’s Brooklyn service territory during the first year of the NGV’s operation. In the case of a dedicated NGV such as a cargo van that uses 1,500 GGE of CNG annually, the amount of the incentive credit would be capped at $1,200. At current rates, this incentive would amount to slightly more than one-half of the distribution margin that a new NGV would be expected to generate over its expected average seven-year life. The cost of the proposed NGV incentive program would be capped at $475,000 annually. This funding level would enable the Company to provide fuel equivalent incentives of $1,200 to approximately 395 new NGVs in KEDNY’s service territory. These NGVs would be expected to generate incremental distribution revenues of approximately $180,000 annually. This matter is presently pending.

All gas utilities in New York operate under full revenue decoupling mechanisms (RDMs). The RDMs provide for the companies to implement a rate surcharge or credit associated with a revenue shortfall or over-collection related to a predetermined revenue target. The RDMs offset the potential effect on earnings of any variation in sales, whether the variation is caused by energy efficiency, weather, or the economy. All gas utilities also operate under weather normalization mechanisms.