What’s Up With National Grid’s Proposed Rate “Freeze”?

Relief is coming to New York gas customers. Or is it?

In May, National Grid filed an unusual proposal with the state’s utility regulator, the Public Service Commission, promising to “freeze” gas rates for its nearly 2 million New York City and Long Island customers. Advocates, analysts, and officials have since blasted it, with some calling it a rate hike “in disguise.” They argue that the proposal will ultimately allow National Grid to collect more money from customers while avoiding scrutiny. 

Regulators are expected to make a decision on the plan in the coming months. So what does the fine print say, and how could it show up on customers’ bills?

What Is National Grid Proposing?

This spring, National Grid was expected to file a “rate case” seeking state approval to increase what it charges its downstate customers for delivering their gas. Normally, utilities seek such rate hikes every few years.

Instead, in late May, it announced a plan to “freeze” gas rates at their current levels until spring 2028. The company’s New York president, Sally Librera, said in a press release that the plan would provide “meaningful financial relief” to customers struggling with the rising cost of living “while ensuring our dedicated employees continue to deliver the safe, reliable energy that heats homes and powers businesses.”

Both Governor Kathy Hochul and New York City Mayor Zohran Mamdani cheered the proposal. 

“I’m pleased to announce National Grid and the Department of Public Service found a way to hold the line on rate hikes for nearly 2 million gas customers,” the governor wrote on X at the time, referring to the state agency in charge of utilities. 

Mamdani called the proposal “an important step toward delivering much-needed relief to the many New Yorkers who open their gas bills with dread.” 

Because National Grid said it was not raising rates, it did not file the proposal as a traditional rate case, which would have opened a court-like process before the Public Service Commission. The proceedings typically last more than a year and involve thousands of pages of documents and public comments, multiple rounds of hearings, and a discovery process allowing parties to interrogate the utility, regulators, and other parties in writing. 

Rather, it opened what could be a much shorter proceeding involving a few months’ worth of written public comments and much less required documentation. So far, there has been no hearing. Comments closed last week, and regulators are now weighing how to respond. 

Why Are People Skeptical?

Critics point out three main ways the proposal could end up costing customers:

First, it would introduce a series of accounting changes that critics say would be favorable to the company. For one: Customers are currently paying a premium to make up for extra costs from 2024–25 that the company had agreed to spread out evenly over three years. Unless regulators approve new rates, that amount would disappear from customers’ bills next spring, saving New York City customers more than $150 a year and Long Island customers about $130, according to an estimate from the Public Utility Law Project, a consumer advocacy group. 

Now, National Grid is proposing to maintain the premium for an extra year. 

National Grid is also proposing to slightly increase spending on gas infrastructure, for a total of more than $1.7 billion. That includes some $700 million between New York City and Long Island to replace pipes.

The utility’s own filings indicate that it intends to bill customers for its spending in the future. A proposed surcharge would add more than $50 to the average heating customer’s annual bill after the “freeze” expires, according to National Grid data reviewed by the firm Synapse Energy Economics. That would be on top of any other hikes approved in a future rate case.

“Basically, they’re taking out credit on behalf of the rate payers and calling it a rate freeze. That’s not what it is,” said Kristen McManus, government affairs director at AARP New York, which opposes National Grid’s proposal. 

Finally, the utility is proposing to roll back standards for fixing and preventing leaks in its gas pipes. While climate groups have long called pipe replacement programs a waste of money, they say the company should not be allowed to change standards unilaterally and potentially dodge penalties for failing to address leaks. 

National Grid has said the proposal was crafted to “fairly balance the need to promote customer affordability, fund critical infrastructure investment, and preserve a stable investment climate.” 

But, having now had a few months to pore over the proposal, nearly everyone who has weighed in — including Mamdani’s climate office — is opposed. 

“The more I dug into the filing, I thought, ‘Oh, my God, I can’t believe they’re doing this,’” said Jamie Van Nostrand, policy director at the national nonprofit Future of Heat Initiative. A longtime former utility lawyer and regulator, Van Nostrand called National Grid’s plan a “scam” in a scathing July blog post. 

“It just takes advantage of all this concern about energy affordability, and [they’re] pretending, ‘Oh, we’re going to do our part,’” he told New York Focus. “The ratepayers are still bearing all the pain.” 

The NYC Mayor’s Office of Climate and Environmental Justice wrote in a filing last week that the company’s plan “will harm ratepayers and elevate utility costs over the medium and long term,” leaving “few controls on National Grid to keep costs low.” (Mayoral spokesperson Jeremy Edwards declined to comment further when reached by New York Focus.)

The state’s Utility Intervention Unit, a branch of the New York Department of State that represents customers in utility proceedings, warned that National Grid is quietly seeking revenue increases that, by law, may require the full scrutiny of a rate case. 

Jessica Azulay, executive director of the advocacy group Alliance for a Green Economy, said, “We would love to see a rate freeze and real relief for customers. … Unfortunately, what National Grid is proposing is not that.”

Does the Public Have a Say?

Critics say that the way National Grid put forward its plan, by going outside of the typical rate case process, limits transparency and public participation. Some, including Mamdani’s office, worry it could set a precedent that could undermine future rate cases. 

There are signs that Hochul’s Department of Public Service privately negotiated the proposal in advance with National Grid, aiming to secure a speedy approval by the Public Service Commission. (The seven-member commission votes independently, but its chair is a member of Hochul’s administration and all members consult closely with agency staff.) In an initial statement on the proposal, Hochul herself said that National Grid worked with the agency to craft it. 

In a statement to New York Focus, a Department of Public Service spokesperson noted that it’s common for utilities to meet with agency staff before filing a proposal. “In this instance, as with other utilities, the Department engaged with National Grid to consider options to stabilize rates, including options that could defer the need to file a rate case,” the spokesperson wrote.

National Grid spokesperson Wendy Frigeria did not comment on specific negotiations but said the company “regularly engages in constructive dialogue with Department of Public Service Staff and other parties” to “ensure a thorough understanding of our proposals and the benefits they would deliver to customers.” 

The governor’s office declined to comment further on National Grid’s plan, instead highlighting other measures Hochul has taken to advance affordability, including rebate checks, utility reforms passed in this year’s budget, and an “aggressive push” to enroll New Yorkers in energy affordability programs.

“Governor Hochul has consistently urged the PSC to do everything in its power to prevent rate increases, now and in the future,” said spokesperson Ken Lovett. 

How is National Grid Responding? 

National Grid is standing by its proposal. 

“We are confident in the merits of our rate stabilization proposal and welcome the Public Service Commission’s independent and comprehensive review,” Frigeria said. The company declined to respond in more detail to recent comments filed, referring New York Focus back to its initial press release about the plan.

The Department of Public Service provided a longer defense of the proposal, saying it would only allow National Grid to charge customers for a narrow list of costs — mainly infrastructure spending and taxes — while leaving the company to absorb several other expenses. This should incentivize the company to control those costs in a way that could ultimately help lower rates, the agency spokesperson said. 

The spokesperson added that the deadline for public comments was extended this summer, and stressed that the proposal would still be subject to a rigorous review before a final commission vote.

What’s Next?

Regulators will continue to review filings in the coming weeks. There is no deadline for the Public Service Commission to vote on the proposal, but it could do so at one of its monthly sessions this fall.

When the commission does vote, it could approve or deny the proposal outright, or seek to modify it. It could also convert the proceeding into a larger rate case, which some parties have called for. 

National Grid, meanwhile, has said that if regulators don’t approve the petition as written, they will have little choice but to scrap it and file for rate hikes “​​as quickly as possible, seeking significant delivery rate increases.”