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Investing.com -- National Grid (LON:NG) has filed a joint proposal settlement on Monday with the New York Public Service Commission (NYPSC) concerning the NiMo electric and gas rate case.
The settlement shows a slightly lower Return on Equity (ROE), capital expenditure (capex), and review duration than what was originally requested. However, these figures are slightly higher than previous estimates.
A final decision from NYPSC is anticipated later in 2025.
The joint proposal settlement, submitted following a rate review in May 2024, represents an agreement between National Grid and NYPSC. While the settlement has been reached, it still awaits a final decision, which is expected in the coming months.
National Grid shares rose 0.4% in Monday morning trade.
The terms of the settlement are typically lower than what was requested. The three-year rate plan will run from May 2025 through March 2028, a year less than the original request that extended to March 2029.
The plan includes an ROE of 9.5%, down from the requested 10%, and a funding for capital investment of $1.43 billion in electricity and $351 million in gas for NiMo in the first rate year. These figures are lower than the requested $1.7 billion for electricity and higher than the requested $338 million for gas.
Despite the lower-than-requested figures, the proposed plan’s returns are better than estimates. Barclays (LON:BARC) had estimated an allowed ROE of 9.0%, with an achieved ROE between 8.5 and 8.9%. Every 50 basis point ROE delta is estimated to be approximately 4p/share until 2030 and about 20p/share valuation in perpetuity.
The proposed rate plan will maintain a focus on customer affordability, delivering efficiencies and bill assistance programs throughout its duration. Barclays also estimated a capex of $1.6 billion in NiMo electric and $350 million in NiMo gas year through March 2026.