National Grid 2008 Annual Report Download - page 260

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 9282
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 54
Description: EXH 2(B).6.1
0/1658.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/658/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 9282
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 54 Description: EXH 2(B).6.1
0/1658.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/658/1*
by the Issuer’s
g
as distribution companies. The majority of
g
as supplied to customers in the United States is still sold by local
regulated utilities to their customers. Regulated utilities, such as National Grid USA’s
g
as distribution operations, purchase
g
as
from
g
as producers and
g
as transporters, then transport this
g
as on the independent interstate pipeline system and into
regulated utilities’ gas distribution networks for delivery to customers. National Grid USA’s
g
as distribution companies receive
gas from the inter-state pipeline system at various gate stations of the Issuer’s
g
as distribution companies. The interstate
pipeline system and local
g
as distribution networks are also used to deliver
g
as on behalf of customers who have purchased
gas from independent suppliers or direct from gas producers.
National Grid USA’s
g
as delivery rates comprise a combination of a per customer char
g
e, a demand char
g
e, and a price per
additional therm of gas delivered. The allocation between these components varies by size of customer.
New York
In New York, the NYPSC sets
g
as delivery rates to recover estimates of operatin
g
costs, capital investment, and an allowed
rate of return inclusive of a return on equity dependin
g
on the achievement of certain customer related performance metrics.
Gas commodity costs are
g
enerally fully recovered from customers, subject to NYPSC review and approval. An adjustment to
certain customer bills is made during the months of October to May to cap the Issuer’s exposure to sales variations caused by
weather. The current gas rate structure of each of the Issuer’s KeySpan companies includes a
g
as adjustment clause pursuant
to which variations between actual
g
as costs incurred and
g
as costs billed are deferred and subsequently refunded to or
collected from firm customers.
The Issuer also has a number of service standards for the Issuer’s New York companies, MECo, and Narra
g
ansett, which are
subject to penalties for non-achievement, includin
g
: the maximum rate of customer complaints to the state re
g
ulator; minimum
satisfaction rates for residential, commercial and industrial customer billin
g
and service transactions; minimum percenta
g
e of
meters actually read compared to readin
g
s scheduled; minimum percenta
g
e of customer calls answered within 30 seconds;
minimum enrolment of customers into the low income customer assistance pro
g
ramme; maximum number of outstandin
g
g
as
leaks requirin
g
repair measured on 31 December of each year; maximum number of reportable incidents resultin
g
from the
Issuer’s failure to respond to a request to mark the Issuer’s facilities in 48 hours; and cathodically protecting an agreed-upon
mileage of pre-1971 installed wrapped steel gas main.
The Issuer’s New York gas distribution operations are also measured on the Issuer’s performance in respondin
g
to
g
as
emergency calls within 30, 45 and 60 minutes without associated financial penalties.
Gas supplies required to meet the needs of the Issuer’s gas customers’ winter demands for
g
as are purchased under lon
g
and
short-term firm contracts, as well as on the spot market. Gas supplies purchased by the Issuer for its customers are transported
by interstate pipelines under lon
g
term contracts with interstate pipeline companies from domestic and Canadian supply basins.
Gas peaking supplies are also available to meet National Grid USA’s system requirements on the coldest days of the winter
season. In addition to lon
g
term pipeline contracts, the Issuer also has available seasonal firm transportation pipeline contracts
and various long-term contracts for underground storage capacity.
54