The final decision from the Commission is expected in the spring of 2018 with new rates effective as of April 2018.
The Joint Proposal, which covers fiscal years 2018/19 to 2020/21, includes revenue increases over each of the three years, an allowed 9% Return on Equity for both utilities, a significant capital programme of $2.5 billion in total and incorporates estimated customer savings of $76 million related to the prospective impact of US tax reform.
The joint proposal includes the use of deferred credits to mitigate the impact on the customer bill. Revenues, before the impact of the deferred credits, would increase by $206 million in 2018/19 which compares to National Grid's initial request of $317 million. For 2019/20 and 2020/21 incremental year-on-year revenue increases would be $36 million and $60 million, respectively. The company believes the rate settlement provides the opportunity to earn close to the allowed return from year one.
The IFRS revenue profile will more closely reflect the customer billing profile, after the impact of deferred credits. The filing allows an increase of $57 million in 2018/19, and an incremental $108 million in 2019/20 and $112 million in 2020/21.
Under the Joint Proposal, we expect significant capital to be invested over the three-year period, totalling $2.5 billion. This comprises $1.9 billion in the electric business and $0.6 billion in the gas business to enhance the resilience of the electric system and modernise gas infrastructure.
The settlement will contribute to the improving financial performance of our US operations and allow us to continue to meet our customer needs and support the local communities we serve, while managing the customer bill impact over three years.
