National Grid gears up for rate increase that would drive up annual gas bills by about 10 percent

National Grid plans to seek a rate increase for its roughly 950,000 natural gas customers in Massachusetts, one that would drive up their annual payments by an average of around 10 percent starting in 2027.

The utility informed municipalities on Wednesday about the pending rate request. The company plans to file the rate case with the state Department of Public Utilities in mid-January, to update what’s known as its “base distribution rate plan,” to reflect the increases in costs of providing natural gas distribution services over the past few years.

National Grid last sought and received an increase in its base rate around five years ago, although, like other gas utilities, it seeks DPU approval every six months to adjust the fuel portion of bills to reflect the changing costs of procuring natural gas.

National Grid said the rate hike, if fully approved by the DPU, will drive up winter bill costs by an average of 8.4 percent in its Boston Gas territory — Greater Boston and Central Massachusetts — and by 9.4 percent in its Colonial Gas territory — essentially, Cape Cod and parts of the Merrimack Valley. That means an extra $24 a month for those in the Boston Gas area, and an additional $25 a month for Colonial Gas.

National Grid would spread more of the increased costs throughout the year than it has done in the past, as a way of reducing the impact in the winter. As a result, for a full year, Boston Gas customers would see their bills go up 9.8 percent, and Colonial Gas bills would increase 10.9 percent.

The rate filing comes as the DPU, under direction from Governor Maura Healey, has placed new emphasis on affordability and keeping costs down. On Monday, the DPU announced it was opening an investigation into energy price volatility on electric and gas bills, starting with a comprehensive review of all components in the delivery portion of those bills. (National Grid’s rate request involves that part of the bill.)

Healey is running for reelection next year, and her would-be Republican challengers plan to make the state’s high cost of living and doing business a key element of their campaigns.

Lisa Wieland, National Grid’s New England president, said her executive team is taking affordability into consideration while preparing this rate filing.

“We understand those cost pressures facing … customers,” Wieland said. “It’s why we’re really trying to use every tool we have … while also making these critical investments.”

The rate filing also does not include costs imposed by government policy, namely the Mass Save energy conservation program and a state-mandated gas pipe replacement program.

Wieland said “a lot has changed” since National Grid filed its last rate case in 2020, including soaring material and labor costs and increased safety requirements.

“Our top priority remains delivering energy safely, reliably and affordably,” Wieland said. “That’s what this rate case is really designed to do.”

Spreading more of the distribution costs throughout the year will help minimize the volatility consumers see in the winter, and National Grid is also looking to offer a tiered discount program to replace a flat discount of 25 percent for income-eligible customers. The company is not planning on expanding eligibility, though it will try to increase educational outreach to let more people know about it.

National Grid will use some of the money to pay for already existing projects, such as a pipe tunnel in Lowell, increasing reliability in that area, and upgrades to compressors at the liquefied natural gas storage plant in Dorchester. National Grid maintains about 11,000 miles of gas distribution pipes in Massachusetts, nearly one-third of them dating back to before 1970.

The DPU likely won’t decide until the end of 2026. The new rates would take effect in January 2027 for around 730,000 Boston Gas customers and nearly 220,000 Colonial Gas customers — more than 90 percent of them residential or small business customers, with the rest commercial and industrial ones.

“Investments [like these] are really important to reinforce and modernize critical infrastructure,” Wieland said.

Jon Chesto can be reached at [email protected]. Follow him @jonchesto.