New York Public Service Commission Approves New Rates for New York Utility Business

Three-Year Rate Settlement Approved with No Significant Modifications to the Joint Proposal

WILLIAMSVILLE, N.Y., Dec. 19, 2024 (GLOBE NEWSWIRE) — National Fuel Gas Distribution Corporation (Distribution), the Utility segment of National Fuel Gas Company (NYSE: NFG) (National Fuel or the Company), today received approval from the New York Public Service Commission (PSC) on the terms of a Joint Proposal filed in Distribution’s rate proceeding resulting in a three-year settlement with new rates commencing January 1, 2025.

The incremental revenues will support necessary investments in Distribution’s pipeline infrastructure and workforce, address the rising cost of operating its gas delivery system, and advance more affordable decarbonization initiatives to comply with state climate goals.

This is the first increase to Distribution’s base delivery rates in New York since 2017 and only the second increase in 16 years. The terms of the Joint Proposal, as approved and modified by the PSC, also include several provisions relating to gas safety and customer service that will provide benefits and protections to customers.

Key Financial Outcomes

The rate case settlement reflects a rate base of $1.04 billion (in year one), a return on equity of 9.7%, and an equity ratio of 48% (consistent with the terms outlined in the Joint Proposal filed in September). The settlement also results in an increase in the revenue requirement of $57 million in fiscal 2025, $73 million (or increase of $16 million) in fiscal 2026, and $86 million (or increase of $13 million) in fiscal 2027, with a portion (approximately $13 million per year) relating to the recovery of regulatory assets that were previously recorded to accrue revenues under Distribution’s system modernization trackers. See table below for additional information.

Key Ratemaking Items

The settlement continues previously existing rate mechanisms such as weather normalization and revenue decoupling, which seek to mitigate the impact of weather and align returns with energy conservation goals and adds a new uncollectible expense tracker for the first two rate years, which will allow Distribution to timely collect customer arrearages that have remained elevated due to policies in place during the pandemic.

The rate increase also allows Distribution to recover costs associated with investments needed to support critical resiliency through our long-standing modernization program, such as a pipeline replacement target of a minimum of 105 miles per year.

Timing

The settlement includes a make-whole provision which allows Distribution to recover the impact of higher rates from October 1, 2024, when new rates were requested to take effect, through January 1, 2025, when new rates will commence. The recovery of earnings from the make-whole provision will be recognized in fiscal 2025.

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