By Michael Kuser

U.K.-based National Grid on Thursday said its yearly earnings to the end of March 2018 increased 4% (constant currency) to $4.73 billion, mainly reflecting the strong performance of the company’s U.S. business.

The earnings figure excluded the sale of the company’s U.K. gas distribution business and major storms.

“In the U.S., we faced a unique winter, with major storms across all our jurisdictions,” CEO John Pettigrew said in an analyst call May 17. “In October, we restored over 530,000 electric customers following one of the most severe storms in recent years. And in March, we were challenged again with three-back-to-back nor’easters, which is unprecedented.”

New Rates

National Grid USA now has about 80% of its distribution businesses operating under new rates following successful filings for Massachusetts Electric, Keyspan Gas East (KEDLI), Brooklyn Union Gas (KEDNY) and Niagara Mohawk, Pettigrew said.

The Niagara Mohawk agreement approved in March allows a return on equity of 9% and $2.5 billion of capital investment over three years.

“With the KEDNY and KEDLI settlements, that means over the next three years, total investment in New York will be more than $5 billion,” Pettigrew said.

The company also has pending rate cases for Massachusetts Gas (10.5% ROE) and Rhode Island Gas & Electricity (10.1% ROE), which it expects to have in place by October, he said. Combined, it’s asked for $81 million in additional revenue and $800 million in annual capital allowances.

Pettigrew said both filings are “progressing well,” with the Massachusetts hearing due to conclude later this month and the Rhode Island hearings set to begin in June.

“With the completion of these rate filings, we’ll have new rates for our entire U.S. distribution business, which will contribute to improvements in performance and allow us to achieve returns as close to the allowed level as possible,” he said.

National Grid adjusted the rate filings, as well as that for Niagara Mohawk, to reflect the lower corporate tax rate passed by Congress in late December. Finance Director Andrew Bonfield said the tax cut will be significantly beneficial to consumers and economically neutral to utilities.

Renewables

Pettigrew said the U.S. and U.K. both continue to decarbonize at a fast pace, driving National Grid to increase its engagement in renewable energy.

The economics for solar, wind and storage are becoming increasingly attractive, with further demand for clean energy coming directly from U.S. corporates through power purchase agreements, he said.

“There is no doubt that the ongoing significant growth in large-scale renewables is set to continue into the long term,” Pettigrew said. “In addition, utility-scale renewables also offer attractive opportunities.” He cited the first offshore wind farm in the U.S. off Block Island and a 6-MW battery the company is installing on Nantucket.

The transition to renewables is likely to be closely followed by the electrification of transportation, with many forecasters now predicting price parity with gasoline and diesel cars by the early to mid-2020s, he said.

The U.S. business has installed more than 150 public charging stations for electric vehicles and has submitted proposals to regulators in each of its operating states for EV investments, Pettigrew said.

Bonfield said the company expects “to invest at least $10 billion over the next three years in our U.S. business.”

Quotes courtesy of Seeking Alpha.