Umair Gaines
National Grid is an electricity, natural gas, and clean energy delivery company that serves over 20 million people in New York and Massachusetts. The company offers a variety of rates and payment plans for its customers. For example, there is a standard electric rate for most residential customers, as well as special rates for churches and farms. National Grid also provides a low-income rate for eligible customers, which offers a discount of 32% on their total charges. Additionally, the company encourages customers to enroll in the Budget Billing Plan, which distributes payments evenly throughout the year to offset high energy usage periods. National Grid's rates are subject to change, with the most recent update involving a decrease in electric rates for customers in Massachusetts starting May 1, 2023.
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What You'll Learn
Basic Service rates
National Grid is subject to rules developed as a result of state law for promoting the development of clean, renewable energy. The rules govern the state's Renewable Energy Portfolio Standards (RPS) and require companies like National Grid to either buy electricity generated from renewable resources or purchase Renewable Energy Certificates (RECs). The cost of these certificates is reflected in the Basic Service rates.
National Grid calculates Basic Service rates using monthly prices in its contracts with wholesale suppliers for each 3 or 6-month period under the Fixed Price Option. The Basic Service rate billed to you under the Fixed Price Option will remain the same for several months at a time. Under the Fixed Price Option, the Basic Service rate changes every February 1 and August 1 for Residential and Commercial customers, and every February 1, May 1, August 1, and November 1 for Industrial customers. All rates are based on average monthly contract prices in the Basic Service supply contracts over the applicable period.
National Grid purchases its Basic Service supply and sets Basic Service rates for three groups of customers. The three customer groups and the delivery services included in each are as follows: Residential Group, Commercial Group, and Industrial Group. The company does not make money or profit from Basic Service. As a result, the regulator allows the company to recoup any amount under-billed and requires a refund of any amount over-billed. This takes place over a 12-month period after the regulator has reviewed the comparison of Basic Service billings to the costs of supplying Basic Service, complying with the RPS, and administrative costs.
National Grid procures electricity for residential customers twice a year – in March and September and changes residential Basic Service rates in May and November. The company offers a standard electric rate for the majority of its residential customers, as other rates require special conditions. Service is also available for church and farm customers. Seasonal residences will be charged a fee to turn the service off and on, and charges will be higher if the work is required at a pole or on the street.
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Variable Price Option
National Grid offers a Variable Price Option for its customers, which is based on the monthly changing prices in its contracts with its Basic Service suppliers. This option is automatically applied to all Industrial Group customers and street lighting Commercial Group customers when they first apply for Basic Service.
The Variable Price Option offers customers the opportunity to save money by shifting their electricity usage from months with higher prices to those with lower prices. National Grid does not profit from the prices it pays to wholesale electricity suppliers under these contracts. The company purchases electricity periodically throughout the year, conducting a competitive solicitation and requesting bids from wholesale electricity suppliers.
While customers cannot control how electricity is delivered to their homes, they can reduce their costs by lowering their electricity consumption and/or purchasing electricity from their preferred seller. National Grid also offers a Fixed Price Option, which has a set rate for several months at a time. All Residential Group customers and G-1 (General Service) Commercial Group customers are automatically placed on the Fixed Price Option when they first apply for Basic Service.
Customers on the Variable Price Option can choose to switch to the Fixed Price Option at any time. However, they can only move between these pricing options once during an uninterrupted stay on Basic Service. This means that if they continuously receive Basic Service and have never bought their electric supply from a competitive supplier, they cannot later request to switch back to the Variable Price Option.
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Fixed Price Option
The Fixed Price Option is a pricing plan offered by National Grid that allows customers to maintain a consistent electricity bill for several months. Under this option, the price per unit of electricity remains unchanged for a set duration, providing stability and predictability for households or businesses.
For residential and commercial customers, the Fixed Price Option typically spans six months, while industrial customers are offered a three-month Fixed Price Option. During this period, the only variation in the electricity bill will stem from the customer's actual electricity consumption, which can fluctuate from month to month. This option appeals to those who value consistency and want to avoid the volatility associated with variable pricing.
The Fixed Price Option is particularly advantageous for those who rely heavily on electricity and prefer to budget their expenses effectively. With the knowledge that the price per unit will remain static, customers can more accurately anticipate and manage their electricity expenses. This predictability can be crucial for financial planning, especially for businesses or households with limited discretionary income.
National Grid determines the rates for the Fixed Price Option based on its contracts with wholesale electricity suppliers. The company engages in competitive solicitations, seeking bids from suppliers, and ultimately purchases electricity from those offering the most favourable terms. This process ensures that National Grid can secure competitive rates, which are then passed on to customers without any markup or profit margin added by the company.
It is important to note that while the Fixed Price Option provides stability in pricing, it does not guarantee that the customer will always pay the same total amount on their bill. The overall cost will still depend on the customer's electricity usage, which can vary. Additionally, customers opting for the Fixed Price Option should be aware that they can only switch between pricing options once during their uninterrupted subscription to Basic Service.
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Customer Savings Initiative
National Grid has launched the Customer Savings Initiative to help customers reduce their energy usage, save money, better manage their bills, and secure available energy assistance. The initiative brings together and expands National Grid's many customer resources, including:
Payment assistance programs
National Grid has facilitated more than $43 million in HEAP funding to help Massachusetts customers supplement their energy bills over the last 12 months. The company has also helped more than 25,000 customers sign up for Balanced/Budget Billing, which spreads monthly payments more evenly throughout the year to offset high energy usage periods.
Energy efficiency programs
National Grid has hosted more than 25 Customer Energy Saving Events across Massachusetts, including four online webinars. These events provide customers with individualized assistance to meet their unique circumstances. The company also offers extensive residential and business energy efficiency programs and incentives.
Discounts
National Grid has enrolled more than 255,000 income-eligible electric customers in its discount rate program, with participants receiving a 32% discount.
Flexible payment programs
National Grid offers flexible payment programs to help customers manage their bills.
In addition to these initiatives, National Grid customers in Massachusetts benefit from Energy Choice, which allows them to compare electricity rates from different providers and pay less for electricity. Customers can use the Rate Comparison Tool on ElectricityRates.com to easily switch to a new electricity plan.
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Low-Income Rate
National Grid offers a Low-Income Rate for eligible customers. This rate is designed to provide financial assistance to those who are struggling to pay their electric bills. To be eligible for the Low-Income Rate, customers must meet certain criteria, which typically include having a household income that does not exceed a certain percentage of the state median income level and/or participating in a fuel assistance or other specified benefits program.
In Massachusetts, for instance, National Grid implemented a Residential Low-Income Rate R-2 tariff discount, which took effect on October 1, 2019. Eligible customers under this tariff receive a credit based on 32% of their total bill charges. To apply for this discount, customers must complete an Eligibility Criteria document and provide proof of their income or participation in a benefits program.
In New York, National Grid offers a similar low-income rate program. Eligible customers may receive an Income Eligible Basic Service Credit of $5.00 or $15.00 if they have been approved for a federal Home Energy Assistance Grant. Additionally, National Grid does not profit from the electricity supply obtained for customers under this rate.
National Grid also encourages customers to shop and compare prices with competitive suppliers, as they can choose to purchase electricity from a supplier other than National Grid. This option allows customers to find the most cost-effective supplier for their needs, while still having National Grid deliver the electricity to their home or business.
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Frequently asked questions
Eligible customers will receive a credit based on 32% of the total charges reflected on their bill. To apply, complete the Eligibility Criteria for the Discount (R-2) Rate document.
The standard electric rate is for customers whose rates require special conditions, such as church and farm customers. Seasonal residences will be charged $50, plus taxes, to turn the service off and $50, plus taxes, to re-establish service.
You can lower your energy costs with the SC-1 VTOU rate by shifting your electricity use to off-peak hours from 11 pm to 7 am.
