National Grid 2016 Annual Report Download - page 183

National Grid LNG LLC
On 1 April 2016, the Company filed an application seeking FERC
approval of a planned $180 million liquefaction facility at the
Providence, Rhode Island, LNG plant, with a FERC decision expected
by November 2016. The expected in-service date is December 2018.
Rates for the new liquefaction service will be cost-based formula rates
charged to customers who opt to take liquefaction service.
New England gas and electricity interdependency
New England’s gas and electricity systems have become increasingly
interdependent as the region’s reliance on gas-fired electricity generation
has grown without commensurate pipeline infrastructure expansion,
driving significant increases in the region’s wholesale and retail electricity
costs and electricity reliability concerns. To address this challenge, New
England’s governors are pursuing strategic infrastructure investments
focused on expanding the region’s energy portfolio.
Working with state representatives and our peer utilities, our
Massachusetts and Rhode Island electricity distribution companies
issued a multi-state solicitation for proposals for clean energy and
associated transmission infrastructure to increase the ability to deliver
low-carbon energy. Proposals were submitted on 28 January 2016,
including a proposal comprised of the Vermont Green Line being
developed by Anbaric and National Grid paired with renewable
energy generation.
A multi-year effort in coordination with representatives from several
states, other regional utilities, interstate gas pipelines, state regulators
and FERC led to a filing in January 2016 in Massachusetts by our
electricity distribution companies for approval of precedent agreements
to enter into gas interstate pipeline and storage capacity contracts with
the Access Northeast pipeline project sponsored by Spectra Energy.
The Company also plans to make a filing in Rhode Island in mid 2016
seeking approval of a similar contract on behalf of Narragansett
Electric Company.
With these contracts, our electricity distribution companies will secure
incremental pipeline capacity to release to electricity generators that
will both improve electricity reliability and lower electricity costs for
customers. National Grid is a co-developer, with a 20% stake, of the
Access Northeast project.
Formula rate transparency 206 proceeding
On 28 December 2015, FERC initiated a proceeding against National
Grid and other New England transmission owners under Section
206 of the Federal Power Act. FERC found that the tariff governing
electricity transmission service in New England lacks adequate
transparency and challenge procedures with regard to the formula
rates through which the Company recovers its costs and that the
formula rates appear to lack sufficient detail regarding certain
costs recovered. The parties are currently involved in settlement
negotiations to develop formula rate protocols and to address
FERC’s concerns about specific elements of the formula rate.
FERC financial audit of National Grid USA and affiliates
On 24 November 2015, FERC commenced a financial audit of
National Grid USA, including its service companies and other
affiliates, which covers the period from 1 January 2013 to the present.
The audit will evaluate compliance with the FERC's accounting,
record keeping and reporting requirements as well as interactions
among the service companies and affiliated operating companies.
Based on past audits, we expect the audit to last about 18 months.
FERC Order 1000
Issued in 2011, Order 1000 was FERC’s major policy order intended
to foster regional and inter-regional transmission planning, address
transmission needs driven by public policy requirements and increase
competition in the electricity transmission industry. Policies to comply
with Order 1000 have been in effect in New York and New England
since January 2014 and May 2015 respectively. The competitive
transmission planning processes instituted under Order 1000 have
opened National Grid’s service territory to competition from non-
incumbent transmission developers and also created opportunities
for National Grid to compete for transmission projects outside of the
Company’s current geographic footprint.
In the first applications of the Order 1000 planning and competitive
solicitation processes in New York or New England, NYPSC has
identified two transmission needs in New York driven by public policy
goals. The first, in western New York, is intended to relieve congestion
and to maximise hydropower and Ontario imports. In December 2015,
National Grid submitted two competitive transmission proposals for
projects to address the need in western New York. In addition, NYPSC
identified a transmission need to allow greater flow of power from
upstate to downstate New York. Competitive proposals to meet this
transmission need were solicited in February 2016. National Grid
submitted a competitive transmission proposal in April 2016, with
project selection expected in 2016.
Additional Information
181National Grid Annual Report and Accounts 2015/16 The business in detail