National Grid The Narragansett Electric Company
INVESTIGATION AS TO THE PROPRIETY OF PROPOSED TARIFF CHANGES
Testimony and Schedules of:
William F. Dowd Kimbugwe A. Kateregga
Book 4 of 9 June 1, 2009 Submitted to: Rhode Island Public Utilities Commission Docket No. R.I.P.U.C. ____ Submitted by:
Testim
ony of
William
F. Dow
d
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
PRE-FILED DIRECT TESTIMONY
OF
WILLIAM F. DOWD
1
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Table of Contents
I. Introduction and Qualifications .....................................................................................1 II. Purpose of Testimony ....................................................................................................2 III. Overview of National Grid’s Approach to Wages and Benefits....................................2 IV. Non Union Wages..........................................................................................................9 V. Union Wages................................................................................................................12 VI. Benefit Plans ................................................................................................................14 VII. Conclusion ...................................................................................................................19
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I. Introduction and Qualifications 1
Q. Mr. Dowd, please state your name and business address. 2
A. My name is William F. Dowd. My business address is 52 Second Avenue, Waltham, 3
Massachusetts 02451. 4
5
Q. By whom are you employed and in what capacity? 6
A. I am employed by National Grid USA Service Company, Inc., a subsidiary of National 7
Grid USA, and currently hold the position of Senior Vice President of Labor Relations. 8
My responsibilities include overseeing labor relations for National Grid, including 9
Narragansett Electric Company. Throughout this testimony, I will refer to National Grid 10
USA and its subsidiaries as “National Grid.” For purposes of clarity, where I intend to 11
refer to Narragansett Electric Company, I will refer to it as the “Company.” 12
13
Prior to being appointed to my current position in August 2007, I was the Vice President 14
of Compensation and Benefits for National Grid. In that capacity, I developed and 15
implemented human resource strategy, policies and procedures relating to employee 16
compensation and benefits for both union and non-union personnel in the United States, 17
which included National Grid’s New England and Upstate New York utility operations. 18
19
Q. Please describe your educational background and business experience. 20
A. I received a BA degree from Bridgewater State College in Bridgewater, MA and a 21
Masters Degree in Public Administration from Suffolk University in Boston, MA. I 22
joined National Grid’s predecessor, the former New England Electric System, in 23
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December 1984 and have held a variety of professional and managerial positions in 1
Human Resources since then, primarily focused on employee benefits, compensation and 2
labor relations. 3
4
Q. Have you previously testified before the Public Utilities Commission 5
(“Commission”) or any other regulatory commissions? 6
A. I have not previously testified before the Commission. However, I have testified before 7
both the New York Public Service Commission and the Massachusetts Department of 8
Public Utilities. 9
10
II. Purpose of Testimony 11
Q. What is the purpose of your testimony? 12
A. The purpose of my testimony is to support the Company’s revenue requirement as it 13
relates to employee compensation, including wages and benefits, and to discuss National 14
Grid’s efforts to manage and control the costs of these programs. Specifically, my 15
testimony discusses the Company’s policies regarding employee wages and benefits and 16
the costs associated with them for the Test Year ending December 31, 2008 and the Rate 17
Year ending December 31, 2010 18
19
III. Overview of National Grid’s Approach to Wages and Benefits 20
Q. Please describe National Grid’s philosophy relating to employee wages and benefits 21
and how it manages those costs. 22
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A. National Grid has developed a policy that it calls its Total Rewards Program to provide 1
employees with an overall package of wages and benefits that is market competitive, 2
offers flexibility and choice and supports a high performance culture by directly linking 3
performance to rewards. By maintaining a comprehensive and competitive approach to 4
compensation that establishes appropriate levels of pay and benefits, National Grid can 5
attract and retain a high quality workforce and motivate employees to improve their 6
performance. At the same time, such an approach is cost-effective because it provides 7
compensation that is no greater than that paid by comparable employers, but structures 8
the compensation so that it is tied to achievement of goals that are consistent with 9
corporate objectives. 10
11
Q. Please describe National Grid’s efforts to manage or control the cost of the wages 12
and benefits it offers. 13
A. As part of its efforts to control the cost of our overall compensation structure, National 14
Grid monitors the marketplace to ensure that its benefit programs are both cost-effective 15
and sufficient to enable it to attract and retain the highly skilled workforce needed to 16
deliver excellent customer service and achieve the financial success required by the 17
capital markets. 18
19
The most recent changes to National Grid’s pay and benefits structure were implemented 20
as a result of the merger process associated with the acquisition of KeySpan Corporation 21
(“KeySpan”). As part of the integration process related to that merger, National Grid 22
commissioned a market analysis of its wages and benefits to help align the two 23
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companies. While the overall value of the compensation programs at the two companies 1
was roughly equivalent prior to the merger, the relationship between pay and benefits 2
differed, with legacy National Grid providing more value to employees through benefit 3
plans and less value through variable pay1. The market analysis showed that the legacy 4
KeySpan approach of providing less costly benefit plans but a greater level of variable 5
pay was more in line with what other employers in the market were providing. National 6
Grid believed that changing its approach to be more in line with the prior KeySpan 7
approach would be beneficial, not only because it would better position the merged 8
company to be competitive with the compensation structure offered by other similar 9
employers, but also because it would better align the compensation structure with 10
National Grid’s efforts to achieve its corporate goals. As a result, National Grid 11
undertook to modify the benefits it offers by reducing the fixed cost components of those 12
programs while at the same time increasing the variable component of pay. 13
14
Q. What specific changes did National Grid make to its benefit plans to reduce the level 15
of fixed costs as it shifted more compensation to the variable pay component? 16
A. During fiscal 2009 (the twelve months ended March 31, 2009), National Grid made a 17
number of changes in its medical, dental, and life insurance programs to reduce costs. 18
Among other things, National Grid made the following changes: 19
• Co-pays for office visits and prescription drugs under the health care 20 program were increased, and a deductible/coinsurance arrangement was 21 implemented for in-patient hospital care. 22 23
1 Base pay levels were relatively similar.
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• The prescription drug program was carved out of each medical plan and 1 was replaced in its entirety with CVS Caremark after undertaking a 2 competitive bidding process. This approach made it possible for National 3 Grid to generate savings by leveraging a volume discount. 4
5 • In the dental program, employee premium sharing was increased from 6
20% to 35%, benefits in the major restorative category were reduced to 7 50% from 60%, and adult orthodontia was eliminated. 8
9 • In the life insurance program, the coverage level was reduced from two 10
times annual base bay to one times annual base pay. 11 12 13 Q. Please explain National Grid’s approach to managing employee wage levels since it 14
acquired KeySpan. 15
A. As I indicated earlier and will discuss in more detail later in my testimony, National 16
Grid’s compensation program includes two major wage components—base pay and 17
variable pay (sometimes called incentive pay). Both components are critical to meeting 18
National Grid’s overall goals for the compensation program and must be considered 19
when comparing National Grid’s compensation levels to market data. 20
21
Q. Please explain why National Grid includes a variable pay component as a significant 22
part of total compensation for its employees. 23
A. As I noted earlier, by strengthening the link between compensation and the achievement 24
of personal and corporate objectives, National Grid is seeking to drive employee 25
performance in a manner that enhances its ability to meet its customer service and overall 26
corporate objectives. Such an approach is common today, and in fact, at companies the 27
size of National Grid, nearly 100% of surveyed companies had variable pay plans, and 28
over 90% of employees at those companies participated in those plans. 29
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Q. There has been significant public discussion in recent months regarding the role of 1
incentive compensation and the payment of bonuses. How do those issues relate to 2
the compensation structure that National Grid has implemented? 3
A. I am aware of the recent negative press coverage surrounding bonus compensation paid at 4
some financial companies, and the fact that this has caused some people to regard 5
incentive compensation programs as synonymous with over compensation. Contrary to 6
the concerns that have been raised for some of those compensation programs, however, 7
National Grid’s approach to variable pay is designed to ensure that (1) employees’ total 8
compensation is reasonable after considering base and variable pay on an aggregate 9
basis, (2) variable pay is based on both the overall performance of the company and the 10
performance of the individual, and (3) individual performance goals reflect objectives 11
that create benefits for customers and shareholders. If National Grid were to compensate 12
its employees only with the level of base pay provided for under the current 13
compensation program, it would not be competitive with others in the market and over 14
time customers would be harmed because National Grid would be unable to attract and 15
retain the type of qualified employees needed to provide safe, reliable and efficient 16
service. 17
18
Unlike the compensation programs that have gotten so much national attention, National 19
Grid’s compensation program is carefully designed to use variable pay in a manner that 20
gives employees a stake in the company’s success in achieving its objectives and 21
provides a tangible reward to employees for performing their jobs at the highest possible 22
level. The variable pay component of the compensation structure is designed to provide a 23
8
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direct and specific incentive to employees to achieve or exceed specified financial, safety, 1
and other operating performance goals. The financial objectives relate to earnings per 2
share, net operating profit and cash flow. Individual objectives relate to safety, reliability 3
and customer satisfaction targets that are aligned with National Grid’s service quality 4
standards and vary depending on the part of the business in which an employee works. 5
Individual objectives also often include the successful completion of specific projects or 6
improvement initiatives. Attached as Schedules NG-WFD-1, NG-WFD-2, NG-WFD-3, 7
NG-WFD-4, and NG-WFD-5 are the variable pay plan guides that are provided to non-8
union employees. These guides explain the performance elements of the plan and the 9
potential value to participants for achieving them. The Company’s revenue requirement 10
in this case does not include the variable pay component for National Grid’s Band A 11
executives (National Grid’s most senior executives), so I am including only the employee 12
guides for our Band B through F employees. 13
14
Using this approach, an employee’s pay is aligned with both the financial performance 15
and health of the company and the achievement of established performance standards that 16
directly benefit customers. For example, field operations employees have goals related to 17
safety and reliability, while customer service employees have goals related to customer 18
satisfaction. Structuring compensation in this manner is fundamentally more cost-19
effective than the traditional approach of using bonuses on top of base compensation that 20
is already at a competitive level on its own because it directly links performance and 21
compensation. 22
23
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Q. Does compensation for union employees also include a variable pay component? 1
A. Yes. The same theory that applies to non-union employees applies to union employees, 2
which is that variable pay gives employees a stake in the Company’s performance and 3
provides direct incentives for employees to strive to meet or exceed metrics tied to safe, 4
reliable, and efficient performance, which, in turn, results in better service and lower 5
costs for customers. As with the non-union program, the variable compensation 6
component is part of, not in addition to, the overall payroll expense that is reasonable and 7
necessary to hire and retain quality employees. Because this philosophy toward 8
compensation is an important part of National Grid’s effort to deliver value to 9
shareholders and maintain and improve customer service, including a component of 10
variable pay as a component of compensation even for union employees has been one of 11
National Grid’s priorities in labor negotiations. 12
13
Q. Why should incentive pay be included in the cost of service in this case? 14
A. As I noted earlier, it is critical that incentive (or variable) compensation be taken into 15
account because it is a central part of National Grid’s compensation philosophy, and the 16
market data National Grid has provided demonstrates that compensation levels are 17
reasonable based on consideration of the total pay package for its workforce. Equally 18
important, the compensation plans are designed to encourage good employee 19
performance, with 40% to 50% of the incentive pay being linked to individual objectives 20
that are directly tied to established service quality measures such as safety, reliability and 21
customer satisfaction. The remaining portion of the incentive pay is tied to company 22
10
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financial performance, forming the critical link between compensation and the overall 1
financial success of the business. 2
3
IV. Non-Union Wages 4
Q. Please describe how National Grid’s compensation program is applied to non-union 5
employees. 6
A. A non-union employee’s base pay generally grows over time as a result of annual merit 7
increases, which are awarded based on individual employee performance and a 8
comparison to the 50th percentile of market. An employee’s base pay (and the potential 9
for variable pay) may also increase to account for promotions, increased job 10
responsibilities, or increased skills and competencies. Annual base pay changes, if any, 11
go into effect on July 1 of each year. 12
13
Variable pay is determined following the close of each fiscal year, but is based on award 14
levels that are set at the beginning of the year and are tied to various corporate and 15
personal objectives that are also set at the beginning of the year. Results are calculated in 16
April and May, with variable pay payments made in early June. Both the merit increase 17
in base pay and variable pay are linked to performance results through a performance 18
appraisal and measurement process, with the results affecting the actual level of payout of 19
variable pay for the year just concluded and the level of base pay for the ensuing year. 20
21
Q. What amounts are included in the revenue requirement for non-union wages? 22
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A. The Company’s Rate Year payroll included in operating expense for non-union 1
employees is $22,657,396, of which $17,200,340 has been allocated from National Grid 2
USA Service Company and $855,032 has been allocated from former KeySpan service 3
companies. This reflects an increase of $960,779 from the Test Year expense of 4
$21,696,617 to reflect annual overall wage increases of 1.5% for the twelve months 5
beginning July 1, 2009. In addition, the Company has included a 3% increase for the six 6
months beginning July 1, 2010, which I will discuss in more detail below. 7
8
Q. How does National Grid determine the pay levels for the various levels of non-union 9
employees? 10
A. National Grid seeks to set pay at approximately the median level for comparable 11
companies in the northeast United States. To determine the median pay level for non-12
union employees, National Grid benchmarks certain positions within each salary 13
band/level and compares overall pay for these benchmark jobs to the 50th percentile of 14
overall pay for comparable jobs in similar size companies in the northeast industrial 15
sector, based on market surveys. For this purpose, National Grid participates in an 16
annual study done by Towers Perrin, a national consulting firm. A copy of the study for 17
2008 is attached as Schedule NG-WFD-6. In addition, National Grid reviews other 18
publicly available data, such as the Salary.com survey/database called “Comp Analyst,” 19
which is a composite of several surveys. 20
21
Q. Has the Company performed a pay comparison specific to Rhode Island for its non-22
union employees? 23
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A. Yes. Salary.com, one of the sources the Company uses for competitive pay information, 1
analyzed the 50th percentile pay rates for the Company’s benchmark positions. Schedule 2
NG-WFD-7 shows the result of that analysis. Some positions are paid less in Rhode 3
Island than in Eastern Massachusetts, and some are paid more. On balance, the 4
differences are not significant enough to adopt a separate base pay structure for Rhode 5
Island employees. Given the large size and wide geographic dispersion of National 6
Grid’s workforce, internal equity and consistency militate in favor of valuing positions 7
and paying individuals using broad geographic measurements, unless the regional 8
disparity is shown to be material. For example, National Grid does maintain a higher 9
base pay structure for positions located in New York City and Long Island, based on 10
market data showing an approximate 6.4% variation. 11
12
Q. Why should the non-union base wage increases in this filing be included in the 13
Company’s cost of service? 14
A. In this proceeding, rates are being set based on a cost of service for the twelve months 15
ended December 31, 2010. In order to properly reflect the calendar year 2010 cost of 16
service, wage increases implemented during 2009 and 2010 must be incorporated to 17
arrive at the proper level of wage expense for 2010. Also, as shown in Schedule NG-18
WFD-6, the Towers Perrin study, a comparison of National Grid’s non-union pay rates to 19
the relevant market demonstrates that they are competitive and, therefore, reasonable. 20
(See page 3 of the Towers Perrin study for the referenced comparison.) 21
22
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Q. What level of non-union base wage increases is included in the Company’s 2010 cost 1
of service? 2
A. The cost of service for 2010 reflects the 2009 non-union base wage increases of 1.5 %, 3
which has already been announced and will become effective July 1, 2009, as well as a 4
3% increase, which will become effective July 1, 2010. 5
6
Q. Why has the Company included a non-union salary adjustment that will be effective 7
as of July 1, 2010? 8
A. The Company’s practice is to adjust non-union wages annually. Although the current 9
economic conditions have led National Grid to implement a very conservative non-union 10
merit increase (1.5%) beginning July 1, 2009, the Company plans to implement a 3% 11
increase effective July 1, 2010, which is consistent with historical levels. Therefore, the 12
cost of service for 2010 has been adjusted accordingly. 13
14
V. Union Wages 15
Q. Does National Grid follow a similar compensation philosophy with regard to its 16
union employees? 17
A. Yes. As I noted earlier, wages for union employees at National Grid generally include a 18
variable pay component as well. Under their collective bargaining agreements, the 19
following unions participate in a variable pay plan that pays out if certain financial, 20
safety, and other operating performance goals are achieved. The International 21
Brotherhood of Electrical Workers (“IBEW”) Locals 486 and 1345 and the Utility 22
Workers Union of America (“UWUA”) Locals 310 and 369 participate in a variable pay 23
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plan with a target payment of 3.5% of all pay. IBEW Local 3, the Transport Workers 1
Union (“TWU”) Local 101, UWUA Locals 318 and 350, and the United Steelworkers 2
Union Locals 12102-03, 12012-04, 13507 and 12003 participate in variable pay plans 3
with target payments of 1.5% to 2.0 % of base pay. 4
5
Q. What is the payroll expense that is included in the Company’s revenue requirement 6
in this case for union employees? 7
A. The total union payroll expense for the Rate Year is $23,714,167, of which $4,274,121 8
has been allocated from National Grid USA Service Company and $38,901 has been 9
allocated from former KeySpan service companies. This reflects increased wages 10
through June 30, 2010 that have already been agreed to through the unions’ collective 11
bargaining contracts. Specifically, the Company (or National Grid USA Service 12
Company, as the case may be) and IBEW Locals 486 and 1345 negotiated a four year 13
labor agreement in May 2007 pursuant to which these union workers will receive base 14
wage increases of 3% on May 11, 2009 and May 11, 2010. The Company (or the service 15
company, as the case may be) and UWUA Locals 310 and 369 have agreed upon the 16
same level of increase as part of a four year labor agreement. IBEW Local 1049 has an 17
existing labor agreement which provides a 3.25% base rate increase on February 13, 2009 18
and a 3.5% increase on February 13, 2010. TWU Local 101 has an existing labor 19
agreement which provides for a 3.5% base rate increase on October 15, 2009. United 20
Steelworkers Union Local 13507 has an existing labor agreement that provides for a 21
3.0% base rate increase on February 19, 2009. United Steelworkers Union Local 12003 22
has an existing labor agreement that provides for a 2.5% base rate increase on March 9, 23
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2009 and March 8, 2010. IBEW Local 3, United Steelworkers Union Locals 12012-03, 1
12012-04, and UWUA Locals 318 and 350 all have contracts which expire in 2009 and 2
may result in base rate increases as well. 3
4
Q. What steps does National Grid take to ensure that the union wages it pays are 5
reasonable? 6
A. For union employees, National Grid obtains information regarding hourly pay rates from 7
surrounding utilities to measure the competitiveness of union pay levels. Schedule NG-8
WFD-8 shows the most recent comparison of pay levels for key union jobs among a 9
number of New England utilities. As the schedule shows, National Grid’s wage rates are 10
within the range of these other utilities. In reviewing this data, it’s important to bear in 11
mind that there are a variety of other factors that are difficult or impossible to measure 12
that have a significant impact on total pay under each company’s union contracts. These 13
include matters such as premiums, overtime rules, progression times and work rules. 14
15
VI. Benefit Plans 16
Q. Please describe the benefit package that is offered to employees of National Grid, 17
including those of the Company. 18
A. National Grid provides a variety of employee health and welfare and pension and post-19
retirement benefit (“OPEB”) plans to its union, non-union and executive employees. 20
Benefit plans are offered for medical coverage, dental coverage, life insurance coverage 21
and long-term disability coverage. There are also paid vacations and holidays. In 22
16
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addition, employees are offered a defined benefit pension plan, a defined contribution or 1
401(k) plan and post-retirement benefits. 2
3
Q. How does National Grid ensure that its benefit programs are reasonable and 4
competitive? 5
A. Periodically, National Grid commissions a study by outside consultants for this purpose. 6
The consultants (Towers Perrin) collect benefit plan provisions from hundreds of 7
employers in all sectors of the economy and use their proprietary software to measure the 8
value of these programs. National Grid selects twelve to fifteen comparable companies – 9
mostly utilities – to determine the relative value of its benefit programs. Schedules NG-10
WFD-9 and NG-WFD-10 are the most recent studies for both union and non-union 11
benefits, respectively. The analysis is conducted for each benefit separately as well as on 12
an entire-program basis. It is not unusual for results to vary benefit by benefit due to 13
unique factors associated with each company’s history and priorities. The entire-program 14
analysis combines all values and allows for a comparison between companies’ benefit 15
programs. I should note that a condition of participation is that the link between the 16
participating company and the value of the benefits it provides not be disclosed. The 17
studies I am including with this testimony, therefore, mask which companies correlate 18
with which data, other than for National Grid. However, the names of the participants are 19
provided in the reports, so the Commission will be aware of the companies to which 20
National Grid’s data was compared. As you can see from both sets of charts, National 21
Grid benefit plans for both non-union and union employees are very close to the median. 22
23
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Q. What efforts has National Grid undertaken to control costs associated with its 1
benefit programs? 2
A. The Company has taken many steps to control benefit costs. Earlier, I discussed some of 3
the changes resulting from the review undertaken as part of the acquisition of KeySpan. 4
In addition, National Grid participates in both industry groups and benefit councils to 5
learn best practices and stay abreast of market developments. National Grid also seeks 6
new ideas and suggestions from its vendors. The data provided from the Towers Perrin 7
studies demonstrate the success of National Grid’s efforts. In addition, all of National 8
Grid’s health and welfare benefit plans are self-insured, which affords it a greater ability 9
to control costs than it would have under third party insurance programs. Because these 10
plans are self-insured, the costs for the programs are directly linked to the utilization of 11
benefits. National Grid’s medical plans also provide extensive health and wellness 12
programs designed to reduce health risks and reduce the occurrence of costly diseases. 13
This, combined with coverage for preventive check-ups and screenings, provides a 14
benefit structure that, over time, should help to mitigate costs and improve employee 15
wellness. 16
17
Another area of cost control is in National Grid’s disability benefit program, which 18
protects employees from the loss of income as a result of sickness or disability. To 19
ensure that these benefits are paid only to legitimately sick and/or disabled employees, 20
National Grid teams up its internal nurse practitioners with a third party – Matrix – to 21
monitor employee care, verify with treating physicians, find alternative light duty work 22
where it is feasible and ensure as rapid a return to regular duty as reasonably possible. 23
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Q. Were similar efforts made to control the cost of union benefit plans? 1
A. The benefit plan changes described above occurred after the negotiations for a new 2
agreement in May 2007. Therefore, these changes have not yet been addressed with 3
them. However, National Grid self-insures the union benefit plans as well as the non-4
union plans, and has implemented the sick/disability utilization controls with its unions as 5
well. 6
7
Q. Please describe any adjustments to Test Year expense for employee benefit plans 8
that the Company is including in its proposed revenue requirement. 9
A. National Grid is projecting increases of 8% in the costs associated with medical benefits 10
for the Rate Year ending December 31, 2010, which is consistent with its actual 11
experience and with the projections of experts and information from Towers Perrin. For 12
dental benefits, National Grid is projecting a 3% increase in cost which is also consistent 13
with its experience and the advice of experts at Towers Perrin. For all other benefits, the 14
Company has applied the payroll escalation rate to derive the Rate Year costs. 15
16
Q. What has the Company done to control its pension expense? 17
A. National Grid has implemented a common cash balance pension plan design for all non-18
union employees, effective with new hires on and after July 15, 2002. This cash balance 19
pension plan is significantly less costly than the prior final average pay type plan because 20
of its smaller annual benefit accruals and flatter cost curve over the working life of an 21
employee. Both of these attributes result in lower ultimate pension costs for the 22
Company. National Grid has combined this approach with an aggressive participation 23
19
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Page 18 of 19
S:\RADATA1\2009 neco\General Rate Case\Comp & Benefits (Dowd)\Testimony\Dowd Testimony (Final).doc
and investment management campaign in its defined contribution (401k) plan, so that 1
employees can both save more and invest more wisely and still end up with sufficient 2
retirement income security. 3
4
Q. Has National Grid implemented a cash balance plan for union employees? 5
A. National Grid has not implemented a cash balance plan for union employees of the 6
Company or National Grid USA Service Company, Inc. However, IBEW Local 3 and 7
TWU Local 101 have adopted a cash balance pension for new hires on and after October 8
16, 2001. 9
10
Q. Please describe National Grid’s efforts to contain the costs of OPEB expenses. 11
A. National Grid has taken a number of steps to control OPEB expense. At one time, 12
employees could retire and receive post retirement medical benefits without contribution. 13
They also received a reimbursement for the Medicare Part B premium. Over time, 14
National Grid has made a number of changes so that now non-union employees pay for 15
pre-age 65 post retirement medical insurance at the same rates as active employees. They 16
pay a service-based contribution for post-age 65 coverage that has a maximum company 17
contribution of 50%, and reimbursement of the Medicare Part B premium has been 18
eliminated. Union employees likewise pay for pre-age 65 medical at the same rate as 19
active employees, while post-age 65 employees receive an employer contribution toward 20
coverage equal to $4.50 per month per year of service ($9.00 if married). In addition, 21
reimbursement of the Medicare Part B premium has been eliminated. In the life 22
insurance program, at one time, employees retired and their life insurance reduced 23
20
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Page 19 of 19
S:\RADATA1\2009 neco\General Rate Case\Comp & Benefits (Dowd)\Testimony\Dowd Testimony (Final).doc
gradually to about 25% of their final base pay. Non-union employees’ life insurance now 1
drops immediately at retirement to $20,000 and union employees to $11,500. 2
3
VII. Conclusion 4
Q. Does this conclude your direct testimony? 5
A. Yes. 6
21
Schedules of
W
illiam F. D
owd
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedules
Schedule NG-WFD-1 US Employee Guide (Band B) Schedule NG-WFD-2 US Employee Guide (Band C) Schedule NG-WFD-3 US Employee Guide (Band D) Schedule NG-WFD-4 US Employee Guide (Band E) Schedule NG-WFD-5 US Employee Guide (Band F) Schedule NG-WFD-6 Competitive Assessment of Non-Union Compensation (Towers
Perrin, 11/13/08) Schedule NG-WFD-7 Comparison of Rhode Island Wages to New England Wages Schedule NG-WFD-8 National Grid USA Union Wage Comparison Schedule NG-WFD-9 BENVAL Analysis for Union Benefits (Tower Perrin, 10/9/08) Schedule NG-WFD-10 BENVAL Analysis for Non-Union Benefits (Towers Perrin,
9/7/06)
22
Schedule
N
G-W
FD-1
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-1
US Employee Guide (Band B)
23
EMPLOYEE GUIDE TO
THE
ANNUAL BONUS PLAN 2007/08
US – Band B
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 1 of 7
24
1 Introduction
This guide summarises the main provisions of the National Grid Annual Bonus Plan 2007/08 (the “Plan”) and highlights the general operation of the plan.
The Plan is intended to motivate employees to achieve the highest possible financial and individual performance, whilst ensuring that at all times, all safety, health and environment requirements are adhered to, all standards of service are achieved and shareholder expectations reached. In short, all our stakeholders should benefit from the Plan.
Stretching financial targets and individual objectives will be set, as soon as practicable, after the start of the Plan year (April each year).
2 Plan Summary
60% of the maximum bonus opportunity will be based on financial targets and 40% will be based on individual objectives.
2.1 Financial Targets Within the 60% for financial targets, 30% will be based on Group Earnings per Share (Group EPS) and the remaining amount for the financial element of the bonus will be based on appropriate business unit targets e.g. operating profit or any other appropriate targets set by the relevant Executive Director.
2.2 Individual objectives Four or five key individual objectives will be set. They should be stretching, measurable and achievable
When assessing achievement of the individual objectives, equal importance will be attributed to performance against the Leadership Qualities (see attached Appendix 1).
The performance assessment will result in a rating using the National Grid Rating Scale of 1 to 5 (See Appendix 2).
3 Performance Reviews
Your manager will discuss performance against targets and objectives with you on a regular basis throughout the year. An interim review will be undertaken part way through the year to formally assess progress and a year end review will be undertaken to assess final performance. It is both your responsibility and your Manager’s to ensure these discussions take place, they are effective by clearly articulating progress and expectations; and they provide an opportunity for constructive two way dialogue.
4 Worked Example
The attached example shows how the assessment process works. The example is based on an employee who has a maximum bonus opportunity of 70% of salary. 60% of the bonus is based on financial targets and 40% on individual objectives.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 2 of 7
25
On this basis, 42% of salary is based on financial targets and 28% of salary is based on individual objectives. See Appendices 3 and 4 and read in conjunction with the following notes.
4.1 Notes to Example
The Company achieves stretch performance (21%) for Group EPS and target (6.3%) for Business Unit Operating Profit. Business Unit Cashflow is based on achieving between Threshold and Target (1.93%). See Appendix 3.
21% - Group EPS +
6.3% - Business Unit Operational Profit +
1.93% - Business Unit Cashflow
29.23% - Total
In this example, the manager determines the employee frequently exceeds expectations with regard to performance objectives and strongly demonstrates the Leadership Qualities. The manager therefore determines the employee will be in a 2/1 position overall (i.e. Performance Objectives “v” Leadership Qualities) with an overall rating of 2 (Frequently Exceeds Expectations) and that 80% of the maximum available for individual performance will be paid. See Appendix 4.
As such 80% x 28% = 22.4%. This is then added to the total for financial targets (29.23%). Consequently, the bonus achieved is 52% (rounded) out of a bonus maximum of 70%. Therefore, the employee will receive 52% of their salary as a bonus.
Note: There is discretion to reduce payments to take account of significant safety or service standard incidents.
5 Payment of the Bonus
Your bonus is payable in June and is subject to tax withholdings.
6 Ceasing to be employed
If you cease to be an employee during the Plan year, a discretional cash payment may be paid to you, but this will depend on the circumstances of your leaving.
7 Limitations of the Plan
The Company may amend, suspend or terminate all or any part of the Plan at any time.
Participation in, and the operation of, the Plan will not form part of or affect your contract of employment or your employment relationship, nor will they give you the right to continued employment. Participation in one year of the Plan does not indicate that you will participate, or be considered for participation, in any years. You are not entitled to any compensation or other benefit in respect of the Plan.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 3 of 7
26
APPENDIX 1
Leadership Qualities
♦ Lives the National Grid values
♦ Creates the future
♦ Consistently delivers great performance
♦ Builds relationships
♦ Develops self and others
Full details of the Leadership Qualities are included in the Performance For Growth Guidelines.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 4 of 7
27
APPENDIX 2
National Grid Rating Scale Definitions
Creates Exceptional Value (1) — to achieve an overall rating in this category means the employee creates exceptional value in most, if not all, business objectives and leadership qualities, frequently exceeding expectations, and achieving maximum measures of success. Employees in this category:
Drive optimal results while demonstrating extraordinary leadership. Demonstrate role model behaviour in capabilities appropriate to role.
Frequently Exceeds Expectations (2) — to achieve an overall rating in this category means the employee frequently exceeds expectations in most, if not all, business objectives and leadership qualities, achieving above target measures of success. Employees in this category:
Excel at contributing to achievement of targeted goals within their job role and frequently achieve above target levels.
Deliver strong results while demonstrating strong leadership. Demonstrate great strengths in qualities appropriate to role.
Consistently Meets Expectations (3) — to achieve an overall rating in this category means the employee consistently meets expectations and has exceeded in a few business objectives and leadership qualities. Employees in this category:
Consistently contribute to achievement of the success of the business unit by meeting all goals and exceeding some.
Are reliable and dependable in the performance of day-to-day and stretch objectives. Consistently demonstrate leadership qualities.
Meets Most Expectations (4) — to achieve an overall rating in this category means the employee meets most expectations in business objectives and leadership qualities, achieving some target measures of success. Employees in this category:
Contribute to achievement of goals and success of the immediate business area. Have one or more business objectives that have not been fully realised. Demonstrate most of the leadership qualities.
More Is Expected (5) — to receive an overall rating in this category means that more is expected of the employee in order to achieve target measures of success and/or to improve a significant shortcoming in one or more business objectives and/or leadership qualities. Employees in this category:
Meet minimum requirements of the job; and have required job skills. Deliver results asked for, but do not demonstrate strong initiative to contribute to the
success of the team or the work without direction. Deliver limited added value to the business area. Employees in this category need to work closely with their immediate manager and HR
to take actions that will improve and sustain performance at target levels.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 5 of 7
28
O
vera
ll bo
nus
plan
str
uctu
re
C
ompa
ny
Bus
ines
s U
nit
Indi
vidu
al
M
axim
um
bonu
s po
tent
ial
(% o
f sal
ary)
of
bonu
s of
sa
lary
O
f bo
nus
of
sala
ry
of
bonu
s of
sa
lary
Tota
l 70
%
30%
21
%
30%
21
%
40%
28
%
Com
pany
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Ta
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
EPS
G
1 2.
1 G
2 9.
45
G3
21
G3
21
Bus
ines
s U
nit F
inan
cial
mea
sure
s –
(Wei
ghtin
g - 2
/3rd
s O
pera
ting
Prof
it or
Gro
ss C
osts
etc
and
1/3
rd b
ased
on
targ
ets
appl
icab
le to
th
e G
loba
l lin
e of
bus
ines
s/bu
sine
ss u
nit)
Thre
shol
d (1
0%) o
f Bon
usTa
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
Ope
ratin
g P
rofit
X
1 1.
4 X
2 6.
3 X
3 14
X2
6.
3 C
ash
Flow
Y
1 0.
7 Y
2 3.
15
Y3
7 B
etw
een
Y1
& Y
2 1.
93
App
endi
x 1
Ann
ual B
onus
Tar
gets
for 2
007/
08
A
ppen
dix
3
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 6 of 7
29
Grid
Rat
ing
– In
divi
dual
Obj
ectiv
es &
Lea
ders
hip
Qua
litie
s A
sses
smen
t Onl
y
App
endi
x 4
1
35%
- 49
%
50%
- 74
%
50%
- 74
%
75%
- 89
%
90%
- 10
0%
Lead
ersh
ip
Q
ualit
ies
2
35%
- 49
%
35%
- 49
%
50%
- 74
%
50%
- 74
%
75%
- 89
%
3
0%-3
4%
35%
- 49
%
35%
- 49
%
50%
- 74
%
50%
- 74
%
Key
Perf
orm
ance
Obj
ectiv
es:
1 =
Cre
ates
Exc
eptio
nal V
alue
2
= Fr
eque
ntly
Exc
eeds
Exp
ecta
tions
3
= C
onsi
sten
tly M
eets
Exp
ecta
tions
4
= M
eets
Mos
t Exp
ecta
tions
5 =
Mor
e is
Exp
ecte
d
Lead
ersh
ip Q
ualit
ies:
1 =
Stro
ngly
Dem
onst
rate
d
2 =
Dem
onst
rate
d
3 =
Not
Dem
onst
rate
d C
onsi
sten
tly
5 4
3
Perf
orm
ance
O
bjec
tives
2
1
Ove
rall
Rat
ing
1 =
Cre
ates
Exc
eptio
nal V
alue
2
= Fr
eque
ntly
Exc
eeds
Exp
ecta
tions
3
= C
onsi
sten
tly M
eets
Exp
ecta
tions
4
= M
eets
Mos
t Exp
ecta
tions
5 =
Mor
e is
Exp
ecte
d
Not
e:
%ag
es s
how
n re
late
to th
e %
age
achi
eved
as
a %
age
of m
axim
um fo
r In
divi
dual
Obj
ectiv
es p
art o
f the
bon
us
only
.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-1 Page 7 of 7
30
Schedule
N
G-W
FD-2
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-2
US Employee Guide (Band C)
31
EMPLOYEE GUIDE TO
THE
ANNUAL BONUS PLAN
US – Band C
2008/2009
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 1 of 8
32
Dear colleague
During 2007, we made significant changes to our Company including the merger with KeySpan (which has doubled the size of our US operations) and the reorganisation of our activities around Global Lines of Business.
In order to realise our potential, we need to improve performance across the business on a financial basis, but also in everything we do. We have started this work by identifying ways to fully integrate our operations and deploy best practice and common processes across the organisation.
This performance philosophy flows through to our annual bonus plan, which after having operated Performance For Growth in 2007/08 for Bands A and B, will be cascaded down in 2008/09 to Band D (UK) and Band F (US).
This guide provides information about how the annual bonus plan will operate and your Manager will discuss this further with you over the next few weeks.
Steve Holliday Chief Executive
1 Introduction
This guide summarises the main provisions of the National Grid Annual Bonus Plan 2008/09 (the “Plan”) and highlights the general operation of the plan. The Plan has been approved by the Executive Directors and they have absolute discretion over the operation and design of the Plan (see section 7 for further detail).
The Plan is intended to motivate employees to achieve the highest possible financial and individual performance, whilst ensuring that at all times, all safety, health and environment requirements are adhered to, all standards of service are achieved and shareholder expectations reached. In short, all our stakeholders should benefit from the Plan.
Stretching financial targets and individual objectives will be set, as soon as practicable, after the start of the Plan year (April each year).
2 Plan Summary
50% of the maximum bonus opportunity is based on financial targets and 50% is based on individual objectives.
2.1 Financial Targets Within the 50% for financial targets, 20% is based on Group Earnings per Share (Group EPS) and the remaining amount for the financial element of the bonus will be based on appropriate Line of Business/Shared Services/IS (“LOB”) targets e.g. operating profit or any other appropriate targets set by the relevant Executive Director.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 2 of 8
33
2.2 Individual objectives Four or five key individual objectives are set. They should be stretching, measurable and achievable.
When assessing achievement of the individual objectives, equal importance is attributed to performance against the Leadership Qualities (see attached Appendix 1).
The performance assessment will result in a rating using the National Grid Rating Scale of 1 to 5 (See Appendix 2).
3 Performance Reviews
Your manager will discuss performance against targets and objectives with you on a regular basis throughout the year. An interim review will be undertaken part way through the year to formally assess progress and a year end review will be undertaken to assess final performance. It is both your responsibility and your Manager’s to ensure these discussions take place. They can be effective only by clearly articulating progress and expectations; and by providing an opportunity for constructive two way dialogue. Assessment of performance against individual objectives is based on the what and how ratings as shown below.
4 Worked Example
The attached example shows how the assessment process works. The example is based on an employee who has a maximum bonus opportunity of 40% of salary. 50% of the bonus is based on financial targets and 50% on individual objectives.
On this basis, 20% of salary is based on financial targets and 20% of salary is based on individual objectives. See Appendices 3 and 4 and read in conjunction with the following notes.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 3 of 8
34
4.1 Notes to Example
The Company achieves stretch performance (8%) for Group EPS and target (5.4%) for LOB Operating Profit. See Appendix 3.
8.00% - Group EPS +
5.40% - LOB Operational Profit
13.40% - Total
In this example, the manager determines the employee frequently exceeds expectations with regard to performance objectives and demonstrated the Leadership Qualities. The manager therefore determines the employee will be in a 2/2 position overall (i.e. Performance “v” Leadership Qualities) and that 80% of the maximum available for individual performance will be paid. See Appendix 4.
As such 80% x 20% = 16%. This is then added to the total for financial targets (13.4%). Consequently, the bonus achieved is 29.4% out of a bonus maximum of 40%. Therefore, the employee will receive 29.4% of their salary as a bonus.
Note: There is discretion to reduce payments to take account of significant safety, service standard incidents and environmental issues.
5 Payment of the Bonus
Your bonus is payable in June and is subject to tax withholdings.
6 Ceasing to be employed
If you cease to be an employee during the Plan year, a discretional cash payment may be paid to you, but this will depend on the circumstances of your leaving.
7 Limitations of the Plan
The Company may amend, suspend or terminate all or any part of the Plan at any time.
Participation in, and the operation of, the Plan will not form part of or affect your contract of employment or your employment relationship, nor will they give you the right to continued employment. Participation in one year of the Plan does not indicate that you will participate, or be considered for participation, in any future years. You are not entitled to any compensation or other benefit in respect of the Plan.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 4 of 8
35
APPENDIX 1
Leadership Qualities (the “how”)
♦ Lives the National Grid values
♦ Creates the future
♦ Consistently delivers great performance
♦ Builds relationships
♦ Develops self and others
Full details of the Leadership Qualities are included in the Performance For Growth Guidelines.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 5 of 8
36
APPENDIX 2
Performance Rating Definitions (the “what”)
Creates Exceptional Value (1) — to achieve a rating in this category means the employee creates exceptional value in most, if not all, business objectives, frequently exceeding expectations, and achieving maximum measures of success. Employees in this category:
Frequently achieve stretch levels of performance Drive optimal results
Frequently Exceeds Expectations (2) — to achieve a rating in this category means the employee frequently exceeds expectations in most, if not all, business objectives, achieving above target measures of success. Employees in this category:
Excel at contributing to achievement of targeted goals within their job role and frequently achieve above target levels.
Deliver strong results.
Consistently Meets Expectations (3) — to achieve a rating in this category means the employee consistently meets expectations and has exceeded in a few business objectives. Employees in this category:
Consistently contribute to achievement of the success of the business unit by meeting all goals and exceeding some.
Are reliable and dependable in the performance of day-to-day and stretch objectives.
Meets Most Expectations (4) — to achieve a rating in this category means the employee meets most expectations in business objectives, achieving some target measures of success. Employees in this category:
Contribute to achievement of goals and success of the immediate business area.
Have one or more business objectives that have not been fully realised.
More Is Expected (5) — to receive a rating in this category means that more is expected of the employee in order to achieve target measures of success and/or to improve a significant shortcoming in one or more business objectives. Employees in this category:
Meet minimum requirements of the job; and have required job skills. Deliver results asked for, but do not demonstrate strong initiative to contribute
to the success of the team or the work without direction. Deliver limited added value to the business area.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 6 of 8
37
O
vera
ll bo
nus
plan
str
uctu
re
C
ompa
ny
LOB
In
divi
dual
Max
imum
bo
nus
pote
ntia
l (%
of s
alar
y)
of
bonu
s of
sa
lary
O
f bo
nus
of
sala
ry
of
bonu
s of
sa
lary
Tota
l 40
%
20%
8%
30
%
12%
50
%
20%
Com
pany
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Ta
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
EPS
G
1 0.
8 G
2 3.
60
G3
8 G
3 8
LOB
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Targ
et (4
5%) o
f Bon
us
Stre
tch
(100
%) o
f B
onus
A
ctua
l
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
Ope
ratin
g P
rofit
X
1 1.
2 X
2 5.
4 X
3 12
X2
5.
4
App
endi
x 1
Ann
ual B
onus
Tar
gets
for 2
008/
09
A
ppen
dix
3
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 7 of 8
38
A
ppen
dix
4
Bon
us R
atin
g M
atrix
Lead
ersh
ip
Qua
litie
s (H
ow)
Perf
orm
ance
Obj
ectiv
es
(W
hat)
Not
e:
%
ages
sho
wn
rela
te to
th
e %
age
achi
eved
as
a
%
age
of m
axim
um fo
r the
Indi
vidu
al O
bjec
tives
par
t
of th
e bo
nus
only
.
Stro
ngly
D
emon
stra
ted
1 35
% -
49%
50
% -
74%
75
% -
84%
85
% -
94%
95
% -
100%
Dem
onst
rate
d 2
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
85%
- 94
%
Not
D
emon
stra
ted
Con
sist
ently
3 0%
- 20
%
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
5
Mor
e is
Exp
ecte
d
4
Mee
ts M
ost
Exp
ecta
tions
3
Con
sist
ently
Mee
ts
Exp
ecta
tions
2
Freq
uent
ly
Exc
eeds
E
xpec
tatio
ns
1
Cre
ates
E
xcep
tiona
l Val
ue
Prop
osed
Dis
trib
utio
n G
uide
lines
0%
- 20
%
5%
21%
- 34
%
10%
35
% -
49%
20
%
50%
- 74
%
30%
75
% -
84%
20
%
85%
- 94
%
10%
95
% -
100%
5%
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-2 Page 8 of 8
39
Schedule
N
G-W
FD-3
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-3
US Employee Guide (Band D)
40
EMPLOYEE GUIDE TO
THE
ANNUAL BONUS PLAN
US – Band D
2008/2009
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 1 of 8
41
Dear colleague
During 2007, we made significant changes to our Company including the merger with KeySpan (which has doubled the size of our US operations) and the reorganisation of our activities around Global Lines of Business.
In order to realise our potential, we need to improve performance across the business on a financial basis, but also in everything we do. We have started this work by identifying ways to fully integrate our operations and deploy best practice and common processes across the organisation.
This performance philosophy flows through to our annual bonus plan, which after having operated Performance For Growth in 2007/08 for Bands A and B, will be cascaded down in 2008/09 to Band D (UK) and Band F (US).
This guide provides information about how the annual bonus plan will operate and your Manager will discuss this further with you over the next few weeks.
Steve Holliday Chief Executive
1 Introduction
This guide summarises the main provisions of the National Grid Annual Bonus Plan 2008/09 (the “Plan”) and highlights the general operation of the plan. The Plan has been approved by the Executive Directors and they have absolute discretion over the operation and design of the Plan (see section 7 for further detail).
The Plan is intended to motivate employees to achieve the highest possible financial and individual performance, whilst ensuring that at all times, all safety, health and environment requirements are adhered to, all standards of service are achieved and shareholder expectations reached. In short, all our stakeholders should benefit from the Plan.
Stretching financial targets and individual objectives will be set, as soon as practicable, after the start of the Plan year (April each year).
2 Plan Summary
50% of the maximum bonus opportunity is based on financial targets and 50% is based on individual objectives.
2.1 Financial Targets Within the 50% for financial targets, 20% will be based on Group Earnings per Share (Group EPS) and the remaining amount for the financial element of the bonus will be based on appropriate Line of Business/Shared Services/IS (“LOB”) targets e.g. operating profit or any other appropriate targets set by the relevant Executive Director.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 2 of 8
42
2.2 Individual objectives Four or five key individual objectives are set. They should be stretching, measurable and achievable.
When assessing achievement of the individual objectives, equal importance is attributed to performance against the Leadership Qualities (see attached Appendix 1).
The performance assessment will result in a rating using the National Grid Rating Scale of 1 to 5 (See Appendix 2).
3 Performance Reviews
Your manager will discuss performance against targets and objectives with you on a regular basis throughout the year. An interim review will be undertaken part way through the year to formally assess progress and a year end review will be undertaken to assess final performance. It is both your responsibility and your Manager’s to ensure these discussions take place. They can be effective only by clearly articulating progress and expectations; and by providing an opportunity for constructive two way dialogue. Assessment of performance against individual objectives is based on the what and how ratings as shown below.
4 Worked Example
The attached example shows how the assessment process works. The example is based on an employee who has a maximum bonus opportunity of 30% of salary. 50% of the bonus is based on financial targets and 50% on individual objectives.
On this basis, 15% of salary is based on financial targets and 15% of salary is based on individual objectives. See Appendices 3 and 4 and read in conjunction with the following notes.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 3 of 8
43
4.1 Notes to Example
The Company achieves stretch performance (6%) for Group EPS and target (4.05%) for Business Unit Operating Profit. See Appendix 3.
6.00% - Group EPS +
4.05% - LOB Operational Profit
10.05% - Total
In this example, the manager determines the employee frequently exceeds expectations with regard to performance objectives and demonstrated the Leadership Qualities. The manager therefore determines the employee will be in a 2/2 position overall (i.e. Performance “v” Leadership Qualities) and that 80% of the maximum available for individual performance will be paid. See Appendix 4.
As such 80% x 15% = 12%. This is then added to the total for financial targets (10.05%). Consequently, the bonus achieved is 22.05% out of a bonus maximum of 30%. Therefore, the employee will receive 22.05% of their salary as a bonus.
Note: There is discretion to reduce payments to take account of significant safety, service standard incidents and environmental issues.
5 Payment of the Bonus
Your bonus is payable in June and is subject to tax withholdings.
6 Ceasing to be employed
If you cease to be an employee during the Plan year, a discretional cash payment may be paid to you, but this will depend on the circumstances of your leaving.
7 Limitations of the Plan
The Company may amend, suspend or terminate all or any part of the Plan at any time.
Participation in, and the operation of, the Plan will not form part of or affect your contract of employment or your employment relationship, nor will they give you the right to continued employment. Participation in one year of the Plan does not indicate that you will participate, or be considered for participation, in any future years. You are not entitled to any compensation or other benefit in respect of the Plan.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 4 of 8
44
APPENDIX 1
Leadership Qualities (the “how”)
♦ Lives the National Grid values
♦ Creates the future
♦ Consistently delivers great performance
♦ Builds relationships
♦ Develops self and others
Full details of the Leadership Qualities are included in the Performance For Growth Guidelines.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 5 of 8
45
APPENDIX 2
Performance Rating Definitions (the “what”)
Creates Exceptional Value (1) — to achieve a rating in this category means the employee creates exceptional value in most, if not all, business objectives, frequently exceeding expectations, and achieving maximum measures of success. Employees in this category:
Frequently achieve stretch levels of performance Drive optimal results
Frequently Exceeds Expectations (2) — to achieve a rating in this category means the employee frequently exceeds expectations in most, if not all, business objectives, achieving above target measures of success. Employees in this category:
Excel at contributing to achievement of targeted goals within their job role and frequently achieve above target levels.
Deliver strong results.
Consistently Meets Expectations (3) — to achieve a rating in this category means the employee consistently meets expectations and has exceeded in a few business objectives. Employees in this category:
Consistently contribute to achievement of the success of the business unit by meeting all goals and exceeding some.
Are reliable and dependable in the performance of day-to-day and stretch objectives.
Meets Most Expectations (4) — to achieve a rating in this category means the employee meets most expectations in business objectives, achieving some target measures of success. Employees in this category:
Contribute to achievement of goals and success of the immediate business area.
Have one or more business objectives that have not been fully realised.
More Is Expected (5) — to receive a rating in this category means that more is expected of the employee in order to achieve target measures of success and/or to improve a significant shortcoming in one or more business objectives. Employees in this category:
Meet minimum requirements of the job; and have required job skills. Deliver results asked for, but do not demonstrate strong initiative to contribute
to the success of the team or the work without direction. Deliver limited added value to the business area.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 6 of 8
46
O
vera
ll bo
nus
plan
str
uctu
re
C
ompa
ny
LOB
In
divi
dual
Max
imum
bo
nus
pote
ntia
l (%
of s
alar
y)
of
bonu
s of
sa
lary
of
bo
nus
of
sala
ry
of
bonu
s of
sa
lary
Tota
l 30
%
20%
6%
30
%
9%
50%
15
%
Com
pany
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Ta
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
EPS
G
1 0.
6 G
2 2.
7 G
3 6
G3
6
LOB
Fin
anci
al m
easu
res
Thre
shol
d (1
0%) o
f Bon
usTa
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
Ope
ratin
g P
rofit
X
1 0.
9 X
2 4.
05
X3
9 X2
4.
05
App
endi
x 1
Ann
ual B
onus
Tar
gets
for 2
008/
09
A
ppen
dix
3
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 7 of 8
47
App
endi
x 4
Bon
us R
atin
g M
atrix
Lead
ersh
ip
Qua
litie
s (H
ow)
Pe
rfor
man
ce O
bjec
tives
(Wha
t)
N
ote:
%ag
es s
how
n re
late
to
the
%ag
e ac
hiev
ed a
s a
%ag
e of
max
imum
for t
he
In
divi
dual
Obj
ectiv
es p
art
of
the
bonu
s on
ly.
Stro
ngly
D
emon
stra
ted
1 35
% -
49%
50
% -
74%
75
% -
84%
85
% -
94%
95
% -
100%
Dem
onst
rate
d 2
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
85%
- 94
%
Not
D
emon
stra
ted
Con
sist
ently
3 0%
- 20
%
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
5
Mor
e is
Exp
ecte
d
4
Mee
ts M
ost
Exp
ecta
tions
3
Con
sist
ently
Mee
ts
Exp
ecta
tions
2
Freq
uent
ly
Exc
eeds
E
xpec
tatio
ns
1
Cre
ates
E
xcep
tiona
l Val
ue
Prop
osed
Dis
trib
utio
n G
uide
lines
0%
- 20
%
5%
21%
- 34
%
10%
35
% -
49%
20
%
50%
- 74
%
30%
75
% -
84%
20
%
85%
- 94
%
10%
95
% -
100%
5%
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-3 Page 8 of 8
48
Schedule
N
G-W
FD-4
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-4
US Employee Guide (Band E)
49
EMPLOYEE GUIDE TO
THE
ANNUAL BONUS PLAN
US – Band E
2008/2009
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 1 of 8
50
Dear colleague
During 2007, we made significant changes to our Company including the merger with KeySpan (which has doubled the size of our US operations) and the reorganisation of our activities around Global Lines of Business.
In order to realise our potential, we need to improve performance across the business on a financial basis, but also in everything we do. We have started this work by identifying ways to fully integrate our operations and deploy best practice and common processes across the organisation.
This performance philosophy flows through to our annual bonus plan, which after having operated Performance For Growth in 2007/08 for Bands A and B, will be cascaded down in 2008/09 to Band D (UK) and Band F (US).
This guide provides information about how the annual bonus plan will operate and your Manager will discuss this further with you over the next few weeks.
Steve Holliday Chief Executive
1 Introduction
This guide summarises the main provisions of the National Grid Annual Bonus Plan 2008/09 (the “Plan”) and highlights the general operation of the plan. The Plan has been approved by the Executive Directors and they have absolute discretion over the operation and design of the Plan (see section 7 for further detail).
The Plan is intended to motivate employees to achieve the highest possible financial and individual performance, whilst ensuring that at all times, all safety, health and environment requirements are adhered to, all standards of service are achieved and shareholder expectations reached. In short, all our stakeholders should benefit from the Plan.
Stretching financial targets and individual objectives will be set, as soon as practicable, after the start of the Plan year (April each year).
2 Plan Summary
50% of the maximum bonus opportunity is based on financial targets and 50% will be based on individual objectives.
2.1 Financial Targets Within the 50% for financial targets, 20% will be based on Group Earnings per Share (Group EPS) and the remaining amount for the financial element of the bonus will be based on appropriate business unit targets e.g. operating profit or any other appropriate targets set by the relevant Executive Director.
2.2 Individual objectives Four or five key individual objectives are set. They should be stretching, measurable and achievable.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 2 of 8
51
When assessing achievement of the individual objectives, equal importance is attributed to performance against the Leadership Qualities (see attached Appendix 1).
The performance assessment will result in a rating using the National Grid Rating Scale of 1 to 5 (See Appendix 2).
3 Performance Reviews
Your manager will discuss performance against targets and objectives with you on a regular basis throughout the year. An interim review will be undertaken part way through the year to formally assess progress and a year end review will be undertaken to assess final performance. It is both your responsibility and your Manager’s to ensure these discussions take place. They can be effective only by clearly articulating progress and expectations; and by providing an opportunity for constructive two way dialogue. Assessment of performance against individual objectives is based on the what and how ratings as shown below.
4 Worked Example
The attached example shows how the assessment process works. The example is based on an employee who has a maximum bonus opportunity of 20% of salary. 50% of the bonus is based on financial targets and 50% on individual objectives.
On this basis, 10% of salary is based on financial targets and 10% of salary is based on individual objectives. See Appendices 3 and 4 and read in conjunction with the following notes.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 3 of 8
52
4.1 Notes to Example
The Company achieves stretch performance (4%) for Group EPS and target (2.7%) for Business Unit Operating Profit. See Appendix 3.
4.00% - Group EPS +
2.70% - LOB Operational Profit +
6.70% - Total
In this example, the manager determines the employee frequently exceeds expectations with regard to performance objectives and demonstrated the Leadership Qualities. The manager therefore determines the employee will be in a 2/2 position overall (i.e. Performance “v” Leadership Qualities) and that 80% of the maximum available for individual performance will be paid. See Appendix 4.
As such 80% x 10% = 8%. This is then added to the total for financial targets (6.70%). Consequently, the bonus achieved is 14.70% out of a bonus maximum of 20%. Therefore, the employee will receive 14.70% of their salary as a bonus.
Note: There is discretion to reduce payments to take account of significant safety, service standard incidents and environmental issues.
5 Payment of the Bonus
Your bonus is payable in June and is subject to tax withholdings.
6 Ceasing to be employed
If you cease to be an employee during the Plan year, a discretional cash payment may be paid to you, but this will depend on the circumstances of your leaving.
7 Limitations of the Plan
The Company may amend, suspend or terminate all or any part of the Plan at any time.
Participation in, and the operation of, the Plan will not form part of or affect your contract of employment or your employment relationship, nor will they give you the right to continued employment. Participation in one year of the Plan does not indicate that you will participate, or be considered for participation, in any future years. You are not entitled to any compensation or other benefit in respect of the Plan.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 4 of 8
53
APPENDIX 1
Leadership Qualities (the “how”)
♦ Lives the National Grid values
♦ Creates the future
♦ Consistently delivers great performance
♦ Builds relationships
♦ Develops self and others
Full details of the Leadership Qualities are included in the Performance For Growth Guidelines.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 5 of 8
54
APPENDIX 2
Performance Rating Definitions (the “what”)
Creates Exceptional Value (1) — to achieve a rating in this category means the employee creates exceptional value in most, if not all, business objectives, frequently exceeding expectations, and achieving maximum measures of success. Employees in this category:
Frequently achieve stretch levels of performance Drive optimal results
Frequently Exceeds Expectations (2) — to achieve a rating in this category means the employee frequently exceeds expectations in most, if not all, business objectives, achieving above target measures of success. Employees in this category:
Excel at contributing to achievement of targeted goals within their job role and frequently achieve above target levels.
Deliver strong results.
Consistently Meets Expectations (3) — to achieve a rating in this category means the employee consistently meets expectations and has exceeded in a few business objectives. Employees in this category:
Consistently contribute to achievement of the success of the business unit by meeting all goals and exceeding some.
Are reliable and dependable in the performance of day-to-day and stretch objectives.
Meets Most Expectations (4) — to achieve a rating in this category means the employee meets most expectations in business objectives, achieving some target measures of success. Employees in this category:
Contribute to achievement of goals and success of the immediate business area.
Have one or more business objectives that have not been fully realised.
More Is Expected (5) — to receive a rating in this category means that more is expected of the employee in order to achieve target measures of success and/or to improve a significant shortcoming in one or more business objectives. Employees in this category:
Meet minimum requirements of the job; and have required job skills. Deliver results asked for, but do not demonstrate strong initiative to contribute
to the success of the team or the work without direction. Deliver limited added value to the business area.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 6 of 8
55
O
vera
ll bo
nus
plan
str
uctu
re
C
ompa
ny
LOB
In
divi
dual
Max
imum
bo
nus
pote
ntia
l (%
of s
alar
y)
of
bonu
s of
sa
lary
of
bo
nus
of
sala
ry
of
bonu
s of
sa
lary
Tota
l 20
%
20%
4%
30
%
6%
50%
10
%
Com
pany
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Ta
rget
(45%
) of B
onus
St
retc
h (1
00%
) of
Bon
us
Act
ual
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
EPS
G
1 0.
4 G
2 1.
8 G
3 4
G3
4
LOB
Fin
anci
al m
easu
res
Th
resh
old
(10%
) of B
onus
Targ
et (4
5%) o
f Bon
us
Stre
tch
(100
%) o
f B
onus
A
ctua
l
R
equi
red
resu
lt %
sal
ary
Req
uire
d re
sult
% s
alar
y R
equi
red
resu
lt %
sal
ary
Res
ult
achi
eved
%
of
sala
ry
Ope
ratin
g P
rofit
X
1 0.
6 X
2 2.
7 X
3 6
X2
2.7
App
endi
x 1
Ann
ual B
onus
Tar
gets
for 2
008/
09
A
ppen
dix
3
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 7 of 8
56
App
endi
x 4
Bon
us R
atin
g M
atrix
Lead
ersh
ip
Qua
litie
s (H
ow)
Pe
rfor
man
ce O
bjec
tives
(Wha
t)
N
ote:
%ag
es s
how
n re
late
to
the
%ag
e ac
hiev
ed a
s a
%ag
e of
max
imum
for t
he
In
divi
dual
Obj
ectiv
es p
art
of
the
bonu
s on
ly.
Stro
ngly
D
emon
stra
ted
1 35
% -
49%
50
% -
74%
75
% -
84%
85
% -
94%
95
% -
100%
Dem
onst
rate
d 2
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
85%
- 94
%
Not
D
emon
stra
ted
Con
sist
ently
3 0%
- 20
%
21%
- 34
%
35%
- 49
%
50%
- 74
%
75%
- 84
%
5
Mor
e is
Exp
ecte
d
4
Mee
ts M
ost
Exp
ecta
tions
3
Con
sist
ently
Mee
ts
Exp
ecta
tions
2
Freq
uent
ly
Exc
eeds
E
xpec
tatio
ns
1
Cre
ates
E
xcep
tiona
l Val
ue
Prop
osed
Dis
trib
utio
n G
uide
lines
0%
- 20
%
5%
21%
- 34
%
10%
35
% -
49%
20
%
50%
- 74
%
30%
75
% -
84%
20
%
85%
- 94
%
10%
95
% -
100%
5%
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-4 Page 8 of 8
57
Schedule
N
G-W
FD-5
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-5
US Employee Guide (Band F)
58
EMPLOYEE GUIDE TO
THE
ANNUAL BONUS PLAN
US – Band F
2008/2009
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-5 Page 1 of 8
59
Dear colleague
During 2007, we made significant changes to our Company including the merger with KeySpan (which has doubled the size of our US operations) and the reorganisation of our activities around Global Lines of Business.
In order to realise our potential, we need to improve performance across the business on a financial basis, but also in everything we do. We have started this work by identifying ways to fully integrate our operations and deploy best practice and common processes across the organisation.
This performance philosophy flows through to our annual bonus plan, which after having operated Performance For Growth in 2007/08 for Bands A and B, will be cascaded down in 2008/09 to Band D (UK) and Band F (US).
This guide provides information about how the annual bonus plan will operate and your Manager will discuss this further with you over the next few weeks.
Steve Holliday Chief Executive
1 Introduction
This guide summarises the main provisions of the National Grid Annual Bonus Plan 2008/09 (the “Plan”) and highlights the general operation of the plan. The Plan has been approved by the Executive Directors and they have absolute discretion over the operation and design of the Plan (see section 7 for further detail).
The Plan is intended to motivate employees to achieve the highest possible financial and individual performance, whilst ensuring that at all times, all safety, health and environment requirements are adhered to, all standards of service are achieved and shareholder expectations reached. In short, all our stakeholders should benefit from the Plan.
Stretching financial targets and individual objectives will be set, as soon as practicable, after the start of the Plan year (April each year).
2 Plan Summary
50% of the maximum bonus opportunity will be based on financial targets and 50% will be based on individual objectives.
2.1 Financial Targets Within the 50% for financial targets, 20% is based on Group Earnings per Share (Group EPS) and the remaining amount for the financial element of the bonus is based on appropriate Line of Business/Shared Services/IS (“LOB”) targets e.g. operating profit or any other appropriate targets set by the relevant Executive Director.
2.2 Individual objectives Four or five key individual objectives are set. They should be stretching, measurable and achievable.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-5 Page 2 of 8
60
When assessing achievement of the individual objectives, equal importance is attributed to performance against the Leadership Qualities (see attached Appendix 1).
The performance assessment will result in a rating using the National Grid Rating Scale of 1 to 5 (See Appendix 2).
3 Performance Reviews
Your manager will discuss performance against targets and objectives with you on a regular basis throughout the year. An interim review will be undertaken part way through the year to formally assess progress and a year end review will be undertaken to assess final performance. It is both your responsibility and your Manager’s to ensure these discussions take place. They can be effective only by clearly articulating progress and expectations; and by providing an opportunity for constructive two way dialogue. Assessment of performance against individual objectives is based on the what and how ratings as shown below.
4 Worked Example
The attached example shows how the assessment process works. The example is based on an employee who has a maximum bonus opportunity of 10% of salary. 50% of the bonus is based on financial targets and 50% on individual objectives.
On this basis, 5% of salary is based on financial targets and 5% of salary is based on individual objectives. See Appendices 3 and 4 and read in conjunction with the following notes.
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4.1 Notes to Example
The Company achieves stretch performance (2%) for Group EPS and target (1.35%) for Business Unit Operating Profit. See Appendix 3.
2.00% - Group EPS +
1.35% - LOB Operational Profit
3.35% - Total
In this example, the manager determines the employee frequently exceeds expectations with regard to performance objectives and demonstrated the Leadership Qualities. The manager therefore determines the employee will be in a 2/2 position overall (i.e. Performance “v” Leadership Qualities) and that 80% of the maximum available for individual performance will be paid. See Appendix 4.
As such 80% x 5% = 4%. This is then added to the total for financial targets (3.35%). Consequently, the bonus achieved is 7.35% out of a bonus maximum of 10%. Therefore, the employee will receive 7.35% of their salary as a bonus.
Note: There is discretion to reduce payments to take account of significant safety, service standard incidents and environmental issues.
5 Payment of the Bonus
Your bonus is payable in June and is subject to tax withholdings.
6 Ceasing to be employed
If you cease to be an employee during the Plan year, a discretional cash payment may be paid to you, but this will depend on the circumstances of your leaving.
7 Limitations of the Plan
The Company may amend, suspend or terminate all or any part of the Plan at any time.
Participation in, and the operation of, the Plan will not form part of or affect your contract of employment or your employment relationship, nor will they give you the right to continued employment. Participation in one year of the Plan does not indicate that you will participate, or be considered for participation, in any future years. You are not entitled to any compensation or other benefit in respect of the Plan.
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APPENDIX 1
Leadership Qualities (the “how”)
♦ Lives the National Grid values
♦ Creates the future
♦ Consistently delivers great performance
♦ Builds relationships
♦ Develops self and others
Full details of the Leadership Qualities are included in the Performance For Growth Guidelines.
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APPENDIX 2
Performance Rating Definitions (the “what”)
Creates Exceptional Value (1) — to achieve a rating in this category means the employee creates exceptional value in most, if not all, business objectives, frequently exceeding expectations, and achieving maximum measures of success. Employees in this category:
Frequently achieve stretch levels of performance Drive optimal results
Frequently Exceeds Expectations (2) — to achieve a rating in this category means the employee frequently exceeds expectations in most, if not all, business objectives, achieving above target measures of success. Employees in this category:
Excel at contributing to achievement of targeted goals within their job role and frequently achieve above target levels.
Deliver strong results.
Consistently Meets Expectations (3) — to achieve a rating in this category means the employee consistently meets expectations and has exceeded in a few business objectives. Employees in this category:
Consistently contribute to achievement of the success of the business unit by meeting all goals and exceeding some.
Are reliable and dependable in the performance of day-to-day and stretch objectives.
Meets Most Expectations (4) — to achieve a rating in this category means the employee meets most expectations in business objectives, achieving some target measures of success. Employees in this category:
Contribute to achievement of goals and success of the immediate business area.
Have one or more business objectives that have not been fully realised.
More Is Expected (5) — to receive a rating in this category means that more is expected of the employee in order to achieve target measures of success and/or to improve a significant shortcoming in one or more business objectives. Employees in this category:
Meet minimum requirements of the job; and have required job skills. Deliver results asked for, but do not demonstrate strong initiative to contribute
to the success of the team or the work without direction. Deliver limited added value to the business area.
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Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-5 Page 8 of 8
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Schedule
N
G-W
FD-6
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-6
Competitive Assessment of Non-Union Compensation (Towers Perrin, 11/13/08)
67
National Grid USA
Competitive Assessment of Non-Union Compensation
Outline Prepared by Towers Perrin Michael J. Carter Richard Meischied
November 13, 2008
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November 13, 2008
Table of Contents
COMPETITIVE ASSESSMENT OF NON-UNION COMPENSATION....................................1
Introduction .............................................................................................................................1
Approach to Assessing Pay Competitiveness and Determining the Prevalence of Incentive Compensation.........................................................................................................................1
Findings – Competitiveness of Pay.........................................................................................3
Findings – Prevalence of Incentive Compensation.................................................................4
Observations...........................................................................................................................6
APPENDIX I: DESCRIPTION OF TOWERS PERRIN ..........................................................7
APPENDIX II: BIOGRAPHIES: MICHAEL CARTER AND RICHARD MEISCHEID ..........8
APPENDIX III: 2008 TOWERS PERRIN MIDDLE MANAGEMENT AND PROFESSIONAL SURVEY – ALL PARTICIPATING COMPANIES AND PARTICIPANTS WITH REVENUES GREATER THAN $6 BILLION ...................9 – 10
APPENDIX IV: 2007 TOWERS PERRIN MIDDLE MANAGEMENT AND PROFESSIONAL SURVEY – ALL PARTICIPATING COMPANIES AND PARTICIPANTS WITH REVENUES GREATER THAN $10 BILLION ...............11 – 12
APPENDIX V: 2008 TOWERS PERRIN MIDDLE MANAGEMENT AND PROFESSIONAL SURVEY – ALL PARTICIPATING COMPANIES AND PARTICIPANTS WITH REVENUES GREATER THAN $10 BILLION ...............13 – 14
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National Grid USA 1
November 13, 2008
COMPETITIVE ASSESSMENT OF NON-UNION COMPENSATION
Introduction
National Grid asked Towers Perrin to conduct a competitive assessment of the Company’s
compensation relative to the energy services marketplace. The analysis was focused on the
exempt non-union workforce with salary levels ranging from $40,000 to approximately
$190,000. The research addressed the competitiveness of base salary and base salary plus
incentive compensation relative to the marketplace.
In addition to reviewing the competitiveness of National Grid pay, we were also asked to
research the prevalence of incentive compensation in energy services companies for
employees at these levels. Thus, the second section of this outline addresses the prevalence
of incentive compensation in the marketplace.
Towers Perrin’s research was conducted by Michael Carter and Richard Meischeid, both
Principals of the firm. A description of Towers Perrin and biographies for Michael Carter
and Richard Meischeid are contained in the Appendix I and II, respectively.
Approach to Assessing Pay Competitiveness and Determining the Prevalence of Incentive Compensation
Market pay information was gathered from Towers Perrin’s 2008 Energy Services Middle
Management and Professional Compensation Database. This survey is the most
comprehensive middle management and professional compensation database for the U.S.
electric and gas industry. Selected descriptive information about the database follows below:
2008
Participating companies 123
Number of incumbents reported 116,000
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National Grid USA 2
November 14, 2008
For this specific analysis, market pay data, including base salary and annual incentives, was
gathered for a cross-section of over 400 National Grid positions covering over 5000
incumbents. National Grid compensation was compared with surveyed levels among:
• All 2008 survey participants nationally (123 energy services companies)
• Energy Services Companies with Revenues Over $6 billion plus selected large
regional utilities (38 participants).
The comparison against all survey participants provides a snapshot of National Grid
competitiveness against a broad sample of companies. The comparison with larger utilities
provides a snapshot of Company competitiveness against companies of similar size. Lists of
participating companies included in both survey samples are included in Appendix III.
We assessed the overall competitiveness of pay for all National Grid positions combined, but
also arrayed our findings by salary level to illustrate competitiveness at relevant
organizational levels within National Grid.
Market data reflects survey participants’ salaries in effect as of April, 2008 and incentives
largely reflect 2008 payouts for the 2007 fiscal year performance. National Grid data reflect
salaries in effect as of November, 2008 and incentives reflect June 15, 2008 awards paid for
fiscal year 2007 performance (April 2007 through March 2008).
Incentive compensation market prevalence information was gathered from Towers Perrin’s
2007 and 2008 Energy Services Middle Management and Professional Compensation
Database.
Two years’ data (2007-2008) on bonus practices was gathered to not only capture practices
in 2008, but to also detail trends in bonus practices over the last two years. We have arrayed
bonus prevalence information for all survey participants as well as for energy services
companies with revenues over $10 billion. Names of participating companies in the 2007
and 2008 surveys are provided in Appendix IV and Appendix V.
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National Grid USA 3
November 14, 2008
Findings – Competitiveness of Pay
The analysis shows that National Grid actual salaries and salaries plus 2008 actual incentive
payouts are competitive with the broad (all participants) sample of companies and somewhat
below similarly sized energy services companies.
National Grid Compensation as a Percent of Market
All Participants Similar-Size Companies Base Salary 102% 99%
Base Salary Plus Incentives 99 94
National Grid’s competitiveness, when viewed by salary level, generally follows the trend of the consolidated findings illustrated above.
National Grid Compensation as a Percent of Market
All Participants Similar-Size Companies
Market Salary Bands Salary Salary Plus Incentive Salary
Salary Plus Incentive
$ 40,000 − $ 60,000 111% 107% 110% 104%
$ 60,000 − $ 80,000 102 99 100 95
$ 80,000 − $100,000 102 100 99 95
$100,000 − $120,000 101 98 98 93
$120,000 − $140,000 99 95 100 95
$140,000 − $160,000 94 86 95 87
>$160,000 83 77 81 74
Average 102% 99% 99 94
The data also indicates that, on average, larger energy services companies in the marketplace
have higher levels of compensation. Given that National Grid is among the largest energy
services companies, we believe the more appropriate comparison is with companies of
similar size (in terms of revenue).
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National Grid USA 4
November 14, 2008
Findings – Prevalence of Incentive Compensation
The data in Towers Perrin’s Energy Services surveys clearly demonstrate that incentive plans
are prevalent in U.S. energy services companies and have become a standard component of
the compensation package provided to employees. The results from both the 2007 and 2008
surveys indicate that over 95% of the participants have incentive compensation programs and
offer incentive pay to their employees.
The two charts below capture the prevalence of incentive compensation eligibility at
different pay levels among all participating energy services organizations and in energy
services companies with revenue greater than $10 billion, respectively. The charts detail the
number of incumbents reported by participants, the percentage of these incumbents eligible
at different salary levels as well as the percentage of incumbents actually receiving awards.
The first chart indicates that when we examine the results for all participating organizations,
over 90% of the incumbents are eligible and receive incentive compensation.
Percentage of Incumbents Eligible For and Receiving Incentive Awards:
Total Sample of Energy Services Participants
Base Salary Range# Incumbents
Reported % Eligible%
Receiving# Incumbents
Reported % Eligible%
Receiving
$40,000 to $45,000 1,082 91% 89% 935 88% 87%$45,000 to $50,000 1,795 90% 87% 1,507 91% 90%$50,000 to $55,000 2,605 89% 83% 2,702 88% 85%$55,000 to $60,000 3,922 88% 82% 3,683 92% 89%$60,000 to $65,000 5,163 92% 88% 4,476 94% 92%$65,000 to $70,000 6,126 94% 90% 6,048 94% 93%$70,000 to $75,000 7,840 94% 91% 7,813 95% 94%$75,000 to $80,000 9,442 95% 92% 8,819 96% 94%$80,000 to $85,000 10,367 95% 92% 10,142 96% 95%$85,000 to $90,000 11,049 95% 93% 9,653 96% 95%$90,000 to $95,000 10,133 95% 93% 8,790 96% 94%$95,000 to $100,000 8,679 94% 93% 7,031 95% 94%$100,000 to $110,000 12,343 95% 94% 9,231 97% 96%$110,000 to $120,000 6,731 96% 95% 4,798 96% 95%$120,000 to $130,000 3,895 96% 95% 2,502 97% 97%$130,000 to $140,000 2,158 96% 95% 1,383 98% 97%$140,000 to $150,000 1,258 97% 96% 734 97% 96%$150,000 to $160,000 774 95% 94% 468 99% 98%$160,000 to $170,000 478 96% 95% 249 99% 99%$170,000 to $180,000 271 96% 96% 170 99% 98%$180,000 to $190,000 150 90% 90% 87 99% 99%Greater Than $190,000 125 89% 89% 97 100% 99%
2008 2007
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National Grid USA 5
November 14, 2008
The prevalence of incentive eligibility and payment of awards is even higher in larger energy
services companies (defined as organizations with revenues greater than $10 billion).
Percentage of Incumbents Eligible For and Receiving Incentive Awards:
Energy Services Companies with Revenues over $10 billion
Base Salary Range# Incumbents
Reported % Eligible%
Receiving# Incumbents
Reported % Eligible%
Receiving
$40,000 to $45,000 573 97% 95% 384 99% 98%$45,000 to $50,000 955 96% 93% 581 100% 98%$50,000 to $55,000 1,284 97% 90% 1,112 99% 96%$55,000 to $60,000 1,874 98% 92% 1,600 100% 98%$60,000 to $65,000 2,615 99% 96% 1,914 100% 99%$65,000 to $70,000 3,018 98% 97% 2,801 100% 99%$70,000 to $75,000 3,969 99% 98% 3,698 100% 99%$75,000 to $80,000 5,017 99% 98% 4,346 100% 99%$80,000 to $85,000 5,475 98% 98% 5,097 100% 99%$85,000 to $90,000 6,181 98% 97% 4,941 100% 99%$90,000 to $95,000 5,894 99% 98% 4,777 100% 99%$95,000 to $100,000 5,163 99% 99% 3,905 100% 100%$100,000 to $110,000 7,406 99% 99% 5,222 100% 99%$110,000 to $120,000 4,171 99% 99% 2,792 100% 99%$120,000 to $130,000 2,442 99% 99% 1,413 100% 100%$130,000 to $140,000 1,377 99% 99% 762 100% 100%$140,000 to $150,000 807 99% 99% 380 100% 100%$150,000 to $160,000 502 99% 99% 256 100% 100%$160,000 to $170,000 311 99% 98% 138 100% 100%$170,000 to $180,000 178 98% 97% 97 100% 100%$180,000 to $190,000 113 99% 99% 43 100% 100%Greater Than $190,000 92 100% 100% 58 100% 100%
2008 2007
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National Grid USA 6
November 14, 2008
Observations
Based on the analysis of the market data we conclude that National Grid compensation (both
salaries and incentive levels) are competitively aligned with national market levels, but
slightly below energy services companies of similar size. The data also shows that
incentives are prevalent at the pay levels we examined and are almost universal. Today,
nearly all utilities use annual incentives as a component of their total cash compensation
program.
To attract and retain talented employees in today’s highly competitive market; companies
must offer a competitive total rewards program, including compensation, retirement
program, health and welfare benefits, and learning and development opportunities. Annual
incentives are used widely in the utility industry and have become a standard component of
the compensation package provided to employees. The increased use of incentives reflects a
shift in the overall mix in compensation in the industry to emphasize pay for performance.
Thus, incentive compensation is not “additional” or “optional” compensation that employers
provide to employees, but a required element in the compensation program and a necessary
cost of doing business. Moreover, incentive compensation offers businesses a vehicle to
maintain a portion of compensation in variable form, that is paid only if results are delivered,
rather than increasing fixed costs by delivering all elements of cash compensation in the
form of salary.
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National Grid USA Appendix I 7
November 13, 2008
DESCRIPTION OF TOWERS PERRIN
Towers Perrin is a global professional services firm that helps organizations around the world optimize performance through effective people, risk and financial management.
Our Human Capital Group provides global human resource consulting and related services that help our clients effectively manage their investment in people. Our areas of focus include:
Workforce Effectiveness: Defining the people and skills you need — and when and where you need them — and the culture and environment required to sustain high performance
Total Rewards Effectiveness: Identifying the optimal investment in, and mix of, pay, benefits and other rewards to attract, retain and engage employees, and designing programs that deliver value for cost
MANAGING CHANGEChange strategy, leadership support and culture managementTalent management, including succession planning and employee engagementHR and reward communicationEmployee and organization researchCulture and program assessmentsPerformance linkage analysisWorkforce analysis and planningM&A support
MANAGING BENEFITSRETIREMENT
Benefit strategy and program designRetirement financial managementActuarial servicesCompliance Asset consultingAsset/liability forecasts
HEALTH AND WELFAREHealth care strategy Program governance, measurement and monitoringDesign and pricingCare/disease managementPharmacy benefit consultingDisability managementDental and life insurance consulting
MANAGING PAYExecutive compensation strategy and program designDirector compensation and plan designBroad-based reward strategy and program design Total rewards optimizationPerformance managementJob evaluationSales compensation and measurement Compensation administration
BUILDING AN EFFECTIVEHR ORGANIZATION
HR function strategy HR function designHR sourcing strategyHR service delivery strategy
Web portal design and application development
Employee/manager self-serviceHR technology
Systems consultingERP (HRMS) implementation,
including Oracle/PeopleSoft and SAPAdministration
Open enrollmentBenefit statementsOnline SPDs
USING DATA FOR DECISIONSUPPORT
Comp Online™Benefits Online™Executive Compensation Resources (ECR)™Industry, region and custom surveys
OUTSOURCING THROUGHEXCELLERATEHRO™
Benefit administrationCompensation managementPayrollRecruiting and staffingWorkforce developmentWorkforce administration
Visit us at www.towersperrin.com
Human Resource Function Effectiveness: Understanding the role, structure and capability of the HR function in delivering the right environment and rewards, and the delivery mechanisms best suited for the company and its needs
Operational and Financial Effectiveness: Creating an efficient and cost-effective financial, governance and administrative infrastructure for people programs.
We approach all our work from a single perspective: Does it help deliver measurable business results to your organization?
Establishing a link from HR programs, to employee behavior, to business results guides everything we do. Our services are focused on helping companies manage people costs and risk, enhancing employee and organizational performance, delivering HR services more efficiently, and managing small-and large-scale change, particularly in a merger, acquisition or divestiture.
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National Grid USA Appendix II 8
November 13, 2008
BIOGRAPHIES: MICHAEL CARTER AND RICHARD MEISCHEID
MICHAEL CARTER
Mike Carter is a Principal of Towers Perrin and Head of the New England Executive Compensation practice. His field of specialization is in the design and installation of key executive short- and long-term incentives, total reward systems, field sales programs and performance management programs.
In his 29 years with Towers Perrin, Mike has worked on numerous compensation assignments for a variety of industrial, energy, service and financial services companies including: BIC Corporation, BJ’s Wholesale Club, CEMEX, DENTSPLY International, Eastern Bank, Grupo Modelo, IDEXX Pharmaceuticals, Iron Mountain, Massachusetts Medical Society, National Grid and TD Banknorth. Prior to coming to Boston in 1981, Mike worked at Towers Perrin's Caracas and New York consulting offices. Mr. Carter received his Bachelors and Masters degrees from the University of Miami.
RICHARD MEISCHEID
Mr. Meischeid is a Managing Principal with responsibility for directing Towers Perrin’s compensation consulting practice in the east region. He joined Towers Perrin in 1978 and was elected a Principal of the firm in 1983.
Richard has over twenty-five years experience in working with Boards of Directors and management on executive compensation issues. He has long-term relationships with several clients where he serves as the compensation consultant to the board and management including:
American Electric Power, Circuit City, Equitable Resources, Exelon, Hercules, Nicor, PPL Corporation, Sierra Pacific, Southern Company, Sunoco, PSEG, The VF Corporation, TXU, UGI and Unisys.
Richard is a frequent presenter at compensation and industry meetings on a wide range of topics including annual and long-term incentive plan design, board of director compensation and governance.
Before joining Towers Perrin, Richard was associated with The Wharton School of the University of Pennsylvania, where he served as a graduate teaching assistant. He was a founding member of The Wharton Entrepreneurial Center. Richard graduated from St. Francis College in 1970 and earned an M.B.A. from The Wharton School in 1978.
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National Grid USA Appendix III 9
November 14, 2008
2008 U.S. CDB Energy Services Middle Management and Professional DatabaseParticipant Listing – November 2008 Company AGL Resources Allegheny Energy Allete Alliance Pipeline Alliant Energy Ameren American Electric Power Areva NP Ashmore Energy International ATC Management Avista Bechtel Bettis BG US Services California Independent System Operator Calpine CenterPoint Energy Central Vermont Public Service CH Energy Group City Public Service Cleco CMS Energy Colorado Springs Utilities Consolidated Edison Constellation Energy Covanta Energy Crosstex Energy Dominion Resources DPL DTE Energy Duke Energy Duquesne Light Dynegy East Kentucky Power Cooperative Edison International Electric Energy Electric Power Research Institute El Paso Corporation El Paso Electric Enbridge Energy Energy Future Holdings Energy Northwest Entergy E.ON U.S. EPCO Epcor Equitable Resources Eugene Water & Electric Board Exelon FirstEnergy Fluor FPL Group Garland Power & Light
Company Great Plains Energy Great River Energy Hawaiian Electric IDACORP Idaho National Laboratory Integrys Energy Group JEA KAPL Knight Lower Colorado River Authority McDermott MGE Energy Mirant Nebraska Public Power District New York Independent System Operator New York Power Authority Nicor NiSource Northeast Utilities Northrop Grumman Newport News NorthWestern Energy NOVA Chemicals NRG Energy NSTAR NW Natural OGE Energy Oglethorpe Power Old Dominion Electric Omaha Public Power ONEOK Otter Tail Pacific Gas & Electric PacifiCorp Pepco Holdings Pinnacle West Capital PNM Resources Portland General Electric PPL Progress Energy Public Service Enterprise Group Puget Energy Questar Reliant Energy Salt River Project SCANA Seminole Energy Services Sempra Energy Sierra Pacific Resources Southern Company Services Southern Union Company Spectra Energy STP Nuclear Operating SUEZ Energy North America
Company Targa Resources TECO Energy Tennessee Valley Authority TransAlta TransCanada UIL Holdings UniSource Energy Unitil USEC Vectren Westar Energy Westinghouse Electric Williams Companies Wisconsin Energy Wolf Creek Nuclear Xcel Energy
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National Grid USA Appendix III 10
November 14, 2008
2008 U.S. CDB Energy Services Middle Management and Professional DatabaseParticipant Listing -- November 2008Companies with Revenues Greater than $6 Billion Plus Selected Regional Energy Services Companies
Company CompanyAllegheny Energy FluorAmeren FPL GroupAmerican Electric Power Integrys Energy GroupCalpine NiSourceCenterPoint Energy Northeast UtilitiesCMS Energy NOVA ChemicalsConsolidated Edison NRG EnergyConstellation Energy NSTARDCP Midstream ONEOKDominion Resources Pacific Gas & ElectricDTE Energy Pepco HoldingsDuke Energy PPLEdison International Progress EnergyEnbridge Energy Public Service Enterprise GroupEnergy Future Holdings Reliant EnergyEntergy Sempra EnergyEPCO Southern Company ServicesExelon Williams CompaniesFirstEnergy Xcel Energy
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-6 Page 12 of 16
79
National Grid USA Appendix IV 11
November 14, 2008
2007 CDB Energy Services Middle Management and Professional DatabaseParticipant Listing – November 2008 Company AES Southland AGL Resources Allegheny Energy Allete Alliance Pipeline Alliant Energy Alyeska Pipeline Service Ameren American Electric Power Areva NP Ashmore Energy International ATC Management Atmos Energy Avista Black Hills Power and Light California Independent System Operator Calpine CenterPoint Energy Central Vermont Public Service CH Energy Group Cheniere Energy City of Austin City Public Service Cleco CMS Energy Colorado Springs Utilities Consolidated Edison Constellation Energy Crosstex Energy Dominion Resources DPL DTE Energy Duke Energy Duquesne Light Dynegy East Kentucky Power Cooperative Edison International Electric Energy Electric Power Research Institute El Paso Corporation El Paso Electric Enbridge Energy Energy Future Holdings Energy Northwest Enron Entergy E.ON U.S. EPCO Equitable Resources Eugene Water & Electric Board Exelon
Company FirstEnergy FPL Group Great Plains Energy Hawaiian Electric IDACORP Idaho National Laboratory ITC Holdings JEA KAPL KeySpan Lower Colorado River Authority McDermott MGE Energy Mirant Nebraska Public Power District New York Independent System Operator New York Power Authority Nicor Northeast Utilities Northrop Grumman Newport News NorthWestern Energy NRG Energy NSTAR Nuclear Management NW Natural OGE Energy Oglethorpe Power Old Dominion Electric Omaha Public Power ONEOK Otter Tail Pacific Gas & Electric PacifiCorp Pepco Holdings Pinnacle West Capital PNM Resources Portland General Electric PPL Progress Energy Public Service Enterprise Group Puget Energy Questar Reliant Energy Salt River Project Santee Cooper SCANA Seminole Energy Services Sempra Energy Sierra Pacific Resources Southern Company Services Southern Union Company
Company Spectra Energy STP Nuclear Operating SUEZ Energy North America Targa Resources TECO Energy Tennessee Valley Authority TransAlta TransCanada UIL Holdings UniSource Energy Unitil USEC Vectren Westar Energy Westinghouse Electric − Energy Division Williams Companies Wisconsin Energy Wolf Creek Nuclear Xcel Energy
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-6 Page 13 of 16
80
National Grid USA Appendix IV 12
November 14, 2008
2007 CDB Energy Services Middle Management and Professional Database Participant Listing – November 2008 – Companies with Revenues Greater Than $10 Billion Company American Electric Power Consolidated Edison Constellation Energy Dominion Resources Duke Energy Edison International Energy Future Holdings Entergy EPCO Exelon FirstEnergy FPL Group ONEOK Pacific Gas & Electric Public Service Enterprise Group Reliant Energy Sempra Energy Southern Company Services Williams Companies
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-6 Page 14 of 16
81
National Grid USA Appendix V 13
November 14, 2008
2008 U.S. CDB Energy Services Middle Management and Professional DatabaseParticipant Listing – November 2008 Company AGL Resources Allegheny Energy Allete Alliance Pipeline Alliant Energy Ameren American Electric Power Areva NP Ashmore Energy International ATC Management Avista Bechtel Bettis BG US Services California Independent System Operator Calpine CenterPoint Energy Central Vermont Public Service CH Energy Group City Public Service Cleco CMS Energy Colorado Springs Utilities Consolidated Edison Constellation Energy Covanta Energy Crosstex Energy Dominion Resources DPL DTE Energy Duke Energy Duquesne Light Dynegy East Kentucky Power Cooperative Edison International Electric Energy Electric Power Research Institute El Paso Corporation El Paso Electric Enbridge Energy Energy Future Holdings Energy Northwest Entergy E.ON U.S. EPCO Epcor Equitable Resources Eugene Water & Electric Board Exelon FirstEnergy Fluor FPL Group Garland Power & Light
Company Great Plains Energy Great River Energy Hawaiian Electric IDACORP Idaho National Laboratory Integrys Energy Group JEA KAPL Knight Lower Colorado River Authority McDermott MGE Energy Mirant Nebraska Public Power District New York Independent System Operator New York Power Authority Nicor NiSource Northeast Utilities Northrop Grumman Newport News NorthWestern Energy NOVA Chemicals NRG Energy NSTAR NW Natural OGE Energy Oglethorpe Power Old Dominion Electric Omaha Public Power ONEOK Otter Tail Pacific Gas & Electric PacifiCorp Pepco Holdings Pinnacle West Capital PNM Resources Portland General Electric PPL Progress Energy Public Service Enterprise Group Puget Energy Questar Reliant Energy Salt River Project SCANA Seminole Energy Services Sempra Energy Sierra Pacific Resources Southern Company Services Southern Union Company Spectra Energy STP Nuclear Operating SUEZ Energy North America
Company Targa Resources TECO Energy Tennessee Valley Authority TransAlta TransCanada UIL Holdings UniSource Energy Unitil USEC Vectren Westar Energy Westinghouse Electric Williams Companies Wisconsin Energy Wolf Creek Nuclear Xcel Energy
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-6 Page 15 of 16
82
National Grid USA Appendix V 14
November 14, 2008
2008 U.S. CDB Energy Services Middle Management and Professional Database Participant Listing – November 2008 – Companies with Revenues Greater Than $10 Billion Company American Electric Power Consolidated Edison Constellation Energy Dominion Resources Duke Energy Edison International Entergy EPCO Exelon FirstEnergy Fluor FPL Group Integrys Energy Group ONEOK Pacific Gas & Electric Public Service Enterprise Group Reliant Energy Sempra Energy Southern Company Services Williams Companies Xcel Energy
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-6 Page 16 of 16
83
Schedule
N
G-W
FD-7
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-7
Comparison of Rhode Island Wages to New England Wages
84
S:\RADATA1\2009 neco\General Rate Case\Comp & Benefits (Dowd)\Schedules\[Schedule NG-WFD-7.xls]MRPs Narragansett Electric Companyd/b/a National GridDocket No. R.I.P.U.C. ____Schedule NG-WFD-7Page 1 of 1
Narragansett Electric Company2009 Regional Pay Scales
Job Code Job Title Salary Band2009 NE MRP
(000's)2009 Prov.
MRP (000's) Diff %1400 Administrative Assistant F1 $48.00 $45.10 -6.0%3000 Analyst (Budget) E1 $66.74 $65.20 -2.3%2000 Asc Analyst (Budget) F2 $54.05 $52.80 -2.3%2000 Asc Analyst (Benefit) F2 $54.10 $52.40 -3.1%2500 Asc Engineer F2 $60.00 $63.60 6.0%3500 Engineer E1 $72.00 $79.30 10.1%3600 Envrmtl Engineer E2 $92.00 $88.90 -3.4%3101 HRIS Analyst E1 $66.74 $68.10 2.0%3100 Human Resources Rep E1 $66.74 $65.20 -2.3%2003 Lead Analyst (Budget) D1 $97.76 $98.10 0.3%2003 Lead Analyst (Benefit) D1 $97.76 $93.80 -4.1%2003 Lead Analyst (HRIS) D1 $97.76 $97.90 0.1%8101 Lead LR Rep D1 $97.76 $102.10 4.4%3041 Lead Sr Engineer D1 $104.00 $108.10 3.9%4605 Lead Sr Env Engineer D1 $104.00 $104.00 0.0%8623 Mgr HR Systems D1 $97.76 $119.20 21.9%5500 Prin Engineer D2 $113.00 $126.40 11.9%4601 Prin Evrmtl Engr D1 $104.00 $112.40 8.1%8507 Project Manager D1 $97.76 $111.50 14.1%4560 Sr Acctg Analyst E2 $80.84 $79.30 -1.9%4500 Sr Engineer E2 $92.00 $92.30 0.3%4101 Sr HRIS Analyst E2 $80.84 $85.20 5.4%4100 Sr Human Resources Rep E2 $80.84 $78.40 -3.0%8745 Superintendent D1 $97.76 $102.90 5.3%7465 Supervisor E1 $66.74 $65.50 -1.9%7410 Svr Accts Payable E2 $80.84 $77.20 -4.5%8622 Svr T & D E2 $90.00 $88.10 -2.1%
85
Schedule
N
G-W
FD-8
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-8
National Grid USA Companies Union Wage Comparison
86
S:\RADATA1\2009 neco\General Rate Case\Comp & Benefits (Dowd)\Schedules\[Schedule NG-WFD-8.xls]Wage Comparison Summary Narragansett Electric Companyd/b/a National Grid
Docket No. R.I.P.U.C. ____Schedule NG-WFD-8
Page 1 of 1
NATIONAL GRID USA COMPANIES
UNION WAGE COMPARISONS
TROUBLE CREW 1/C LINE LEAD 1/C O&M METER SR. CUSTCOMPANY SHOOTER LEADER WORKER SPLICER SPLICER WORKER WORKER SERV REP
N-STAR $38.84 $38.36 $36.44 $35.04 $34.81 $36.41 $35.09 $31.84
CONN. LIGHT & POWER 36.93 37.04 36.06 35.80 35.00 35.00 33.09
WESTERN MA ELEC 35.23 36.29 35.27 35.40 34.65 34.99 32.93
UNITED ILLIMUNATING $35.46 $37.19 $35.46 None $32.74 $35.46 $35.46 $29.20
PEABODY (Muni) None None $36.24 None None None $31.17 $23.69
TAUNTON (Muni) None None $42.59 None None None $35.39 $25.81
UNITIL $34.12 $36.46 $33.45 $36.56 $33.17 $31.08 $30.35 Non Union
PSNH None Non-Union $32.30 None None $30.46 $29.84 Non Union
CENTRAL MAINE POWER
NATIONAL GRID - NY $39.87 $39.87 $36.00 $36.52 $33.21 $31.92 $31.92 $16.58
NATIONAL GRID - NE* $39.41 $39.41 $36.00 $37.70 $34.30 $35.05 $31.38 $22.76
Median Rate $36.93 $37.19 $36.00 $36.16 $34.30 $35.00 $32.43 $24.75
Average Rate $37.12 $37.80 $35.98 $36.17 $33.98 $33.80 $32.66 $24.98
Maximum Rate $39.87 $39.87 $42.59 $37.70 $35.00 $36.41 $35.46 $31.84
04/08/2009
87
Schedule
N
G-W
FD-9
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-9
BENVAL Analysis for Union Benefits (Tower Perrin, 10/9/08)
88
Oct
ober
9, 2
008
©20
08 T
ower
s Pe
rrin
BEN
VAL
Ana
lysi
s fo
r Uni
on B
enef
its
Nat
iona
l Gri
d
Con
fiden
tial -
For
Dis
cuss
ion
Pur
pose
s O
nly
.
This
doc
umen
t is
inte
nded
for
disc
uss
ion
purp
oses
onl
y. I
t sho
uld
not
be d
istr
ibut
ed t
o an
y th
ird
part
y, o
r pu
blis
hed
in w
hole
or
in p
art
in a
ny fo
rm, w
ithou
t pr
ior
wri
tten
con
sent
of T
ower
s P
erri
n.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 1 of 54
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1©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Tab
le o
f C
onte
nts
Ove
rvie
w o
f Com
petit
ive
Ass
essm
ent
Ent
ire B
enef
it P
rogr
am
Ret
irem
ent B
enef
its
Act
ive
Ben
efits
Sum
mar
y
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 2 of 54
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2©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ove
rvie
w o
f C
ompe
titi
ve A
sses
smen
t
Tow
ers
Per
rin c
ondu
cted
a b
enef
it pr
ogra
m b
ench
mar
king
ana
lysi
s co
mpa
ring
bene
fit le
vels
for
both
lega
cy N
atio
nal G
rid u
nion
s -N
ew E
ngla
nd (N
GG
-U) a
nd N
ew Y
ork
(NG
GN
-U) -
rela
tive
to
the
unio
n be
nefit
pro
gram
s fo
r 14
peer
org
aniz
atio
ns. T
his
anal
ysis
was
bas
ed o
n 20
08 b
enef
it pr
ogra
ms
for t
he N
atio
nal G
rid U
nion
s as
wel
l as
the
com
para
tor g
roup
s
Incl
uded
thro
ugho
ut th
is d
ocum
ent,
we
have
incl
uded
pla
n su
mm
ary
char
ts fo
r eac
h be
nefit
In th
e R
etire
men
t sec
tion,
we
prov
ide
plan
sum
mar
ies
for e
ach
bene
fit p
rogr
am fo
r eac
h N
atio
nal G
rid U
nion
In th
e A
ctiv
e se
ctio
n, w
e pr
ovid
e pl
an s
umm
arie
s fo
r eac
h be
nefit
pro
gram
and
eac
h N
atio
nal G
rid U
nion
, as
wel
l as
rang
es (t
he lo
wes
t to
high
est v
alue
for t
he g
roup
of v
alue
s),
aver
ages
(the
mea
n of
a g
roup
of v
alue
s), a
nd m
odes
(the
mos
t fre
quen
t val
ue in
a g
roup
of
valu
es),
whe
re p
ossi
ble
for t
he c
ompe
titor
gro
up; w
here
ave
rage
sco
uld
not b
e ca
lcul
ated
, w
e ca
lcul
ated
a ra
nge
and
mod
e on
ly
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 3 of 54
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2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ove
rvie
w o
f C
ompe
titi
ve A
sses
smen
t
The
anal
ysis
was
bas
ed o
n in
divi
dual
em
ploy
er p
lan
prov
isio
ns a
spr
ovid
ed b
y ea
ch
orga
niza
tion
appl
ied
to a
sta
ndar
d po
pula
tion,
usi
ng c
onsi
sten
t eco
nom
ic a
nd
dem
ogra
phic
ass
umpt
ions
, the
reby
mea
surin
g th
e “fi
nanc
ial v
alue
”of t
he p
lan,
not
th
e ac
tual
cos
t of t
he p
lan
BEN
VAL®
dete
rmin
es a
val
ue fo
r the
se b
enef
its b
y ap
plyi
ng a
sta
ndar
d m
etho
dolo
gy to
a s
tand
ard
empl
oyee
pop
ulat
ion
Pla
n pr
ovis
ions
val
ued
are
thos
e th
at a
pply
to n
ewly
hire
d em
ploy
ees
Ben
efit
prog
ram
s ar
e:C
ompa
red
on a
rela
tive
valu
e ba
sis
betw
een
empl
oyer
s --
a sc
ore
of 1
00
repr
esen
ts th
e av
erag
e va
lue
for t
he c
ompa
rato
r gro
upS
core
s ar
e de
term
ined
on
a do
llar v
alue
bas
is re
lativ
e to
the
aver
age
valu
e
Thro
ugho
ut th
is d
ocum
ent,
“Tot
al V
alue
”ref
ers
to th
e po
sitio
ning
of t
he b
enef
it pr
ogra
ms
incl
udin
g th
e va
lue
of e
mpl
oyee
con
tribu
tions
, whe
reas
“Em
ploy
er V
alue
”re
fers
to th
e va
lue
afte
r em
ploy
ee c
ontri
butio
ns h
ave
been
ded
ucte
d
The
tota
l ben
efit
valu
es a
re p
rimar
ily d
riven
by
the
valu
e of
the
retir
emen
t pla
ns,
activ
e an
d po
st-r
etire
men
t med
ical
pla
ns, a
nd v
acat
ion
and
holid
ay p
rogr
ams,
w
hich
com
pris
e th
e va
st m
ajor
ity o
f the
pro
gram
val
ues
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 4 of 54
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4©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ent
ire
Ben
efit
Pro
gram
Nat
iona
l Grid
’s N
ew Y
ork
Uni
on E
mpl
oyer
Val
ue o
f 107
.9 in
dica
tes
that
the
pack
age
of b
enef
its, e
xclu
ding
the
valu
e of
em
ploy
ee c
ontri
butio
ns, i
s m
ore
gene
rous
than
the
aver
age
prog
ram
val
ue; t
he v
alue
is re
duce
d to
101
.7,
or ju
st a
bout
ave
rage
, whe
n al
so c
onsi
derin
g th
e va
lue
of e
mpl
oyee
con
tribu
tions
to th
e va
rious
pro
gram
sTh
e hi
gher
than
ave
rage
em
ploy
er v
alue
is p
rimar
ily th
e re
sult
of a
mor
e ge
nero
us a
ctiv
e an
d re
tiree
med
ical
pr
ogra
m a
nd s
light
ly m
ore
gene
rous
vac
atio
n an
d ho
liday
pro
gram
as
com
pare
d to
pee
r org
aniz
atio
ns, p
artly
of
fset
by
a lo
wer
than
ave
rage
retir
emen
t (de
fined
ben
efit/
defin
ed c
ontri
butio
n) v
alue
Nat
iona
l Grid
’s N
ew E
ngla
nd U
nion
Em
ploy
er V
alue
of 9
6.6
indi
cate
s th
at th
e pa
ckag
e of
ben
efits
, exc
ludi
ng th
e va
lue
of e
mpl
oyee
con
tribu
tions
, is
slig
htly
less
gen
erou
s th
an th
e av
erag
e pr
ogra
m v
alue
; the
tota
l val
ue is
in
crea
sed
to 9
8.5
whe
n al
so c
onsi
derin
g th
e va
lue
of e
mpl
oyee
con
tribu
tions
to th
e va
rious
pro
gram
sTh
is re
sult
is th
e ne
t of a
low
er th
an a
vera
ge a
ctiv
e an
d re
tiree
med
ical
pro
gram
val
ue a
nd a
hig
her t
han
aver
age
retir
emen
t (de
fined
ben
efit/
defin
ed c
ontri
butio
n) v
alue
Entir
e Be
nefit
Pro
gram
Sco
re a
nd R
ank Sc
ore
Rank
/16
Empl
oyer
Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
107.
95
Nat
iona
l Grid
New
Eng
land
Uni
on96
.610
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
101.
78
Nat
iona
l Grid
New
Eng
land
Uni
on98
.510
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 5 of 54
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ers
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inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ent
ire
Ben
efit
Pro
gram
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
Uni
on p
lans
co
mpa
re to
thei
r pee
rs b
oth
in te
rms
of g
ross
ben
efit
valu
e of
thei
r ent
ire b
enef
it pr
ogra
m, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee
cont
ribut
ions
)
MB
EL
KJ
IN
DC
HA
GF
AE
DB
ML
KJ
IC
NF
GH
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 6 of 54
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2008
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ers
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inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pro
gram
Com
pone
nts
by E
mpl
oyer
Val
ue -
New
Yor
k U
nion
The
pie
char
ts a
bove
repr
esen
t the
per
cent
age
that
eac
h be
nefit
com
pone
nt c
ompr
ises
of t
he
tota
l ben
efit
prog
ram
for t
he N
ew Y
ork
Uni
on, a
s co
mpa
red
to a
n av
erag
e co
mpa
nyTh
e N
ew Y
ork
Uni
on’s
med
ical
pro
gram
is m
ore
valu
able
at 5
4.5%
of t
he to
tal b
enef
itpr
ogra
m,
as c
ompa
red
to th
e av
erag
e co
mpa
ny’s
med
ical
pro
gram
, whi
ch c
ompr
ises
onl
y 46
.8%
of t
he
tota
l ben
efit
prog
ram
Thei
r ret
irem
ent p
rogr
am (D
efin
ed B
enef
it +
Def
ined
Con
tribu
tion)
, how
ever
, mak
es u
p a
smal
ler p
erce
ntag
e at
12.
4% o
f the
tota
l ben
efit
prog
ram
, tha
n th
e av
erag
e co
mpa
ny’s
re
tirem
ent p
rogr
am, w
hich
com
pris
es 1
8.3%
of t
he to
tal p
rogr
am
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 7 of 54
95
7©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pro
gram
Com
pone
nts
by E
mpl
oyer
Val
ue -
New
Eng
land
Uni
on
The
pie
char
ts a
bove
repr
esen
t the
per
cent
age
that
eac
h co
mpo
nent
com
pris
es o
f the
tota
l be
nefit
pro
gram
for t
he N
ew E
ngla
nd U
nion
, as
com
pare
d to
an
aver
age
com
pany
The
New
Eng
land
Uni
on’s
ben
efit
prog
ram
mor
e cl
osel
y m
irror
s an
ave
rage
com
pany
’s b
enef
it pr
ogra
m th
an th
e N
ew Y
ork
Uni
onTh
eir m
edic
al p
rogr
am, a
t 43.
2% o
f the
tota
l ben
efit
prog
ram
, is
slig
htly
less
val
uabl
e th
an th
e av
erag
e co
mpa
ny’s
med
ical
pro
gram
, whi
ch c
ompr
ises
46.
8% o
f the
tota
l ben
efit
prog
ram
Thei
r ret
irem
ent p
rogr
am (D
efin
ed B
enef
it +
Def
ined
Con
tribu
tion)
, how
ever
, is
slig
htly
rich
er a
t 21
.5%
of t
he to
tal b
enef
it pr
ogra
m, t
han
the
aver
age
com
pany
’s re
tirem
ent p
rogr
am, w
hich
co
mpr
ises
18.
3% o
f the
tota
l pro
gram
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 8 of 54
96
Ret
irem
ent
Ben
efit
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 9 of 54
97
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ers
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inP
ropr
ieta
ry a
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onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Def
ined
Ben
efit
and
Def
ined
Con
trib
utio
n S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Eng
land
and
New
Yor
k U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
ofco
mbi
ned
defin
ed
bene
fit a
nd d
efin
ed c
ontri
butio
n pr
ogra
ms
Defin
ed B
enef
it an
d Co
ntri
butio
n S
core
and
Ran
k
Scor
eRa
nk/1
6Em
ploy
er V
alue
Nat
iona
l Grid
New
Yor
k U
nion
73.1
15
Nat
iona
l Grid
New
Eng
land
Uni
on11
3.6
5
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
74.9
16
Nat
iona
l Grid
New
Eng
land
Uni
on10
2.9
6
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 10 of 54
98
10©
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Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Def
ined
Ben
efit
and
Def
ined
Con
trib
utio
n C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pla
n de
sign
s
Key
Pla
n D
esig
n Fe
atur
es -
Defin
ed B
enef
it an
d De
fined
Con
tribu
tion
Plan
s
Nat
iona
l Grid
New
Yor
k Un
ion
Nat
iona
l Grid
New
Eng
land
Un
ion
Def
ined
Ben
efit
Plan
Bas
ic F
orm
ula
4%-8
% p
ay c
redi
ts b
ased
on
serv
ice
1.9%
FA
E-5
less
1.3
3% P
IAP
lan
Type
Cas
h B
alan
ceFi
nal P
ayE
arly
Ret
irem
ent S
ubsi
dyN
AU
nred
uced
at 6
2, E
RF
varie
sLu
mp
Sum
Yes
, at a
ny a
geN
o O
ther
30-y
ear T
inte
rest
N/A
Def
ined
Con
tribu
tion
Plan
Em
ploy
er M
atch
50%
on
up to
6%
100%
on
first
2%
, 50%
on
next
4%
Pro
fit S
harin
gN
AN
/A
Oth
er6%
aut
o en
roll,
100
% im
med
iate
ve
stin
g6%
aut
o en
roll,
100
% v
estin
g at
on
e ye
arS
PP
No
No
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 11 of 54
99
11©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Def
ined
Ben
efit
■A
ll bu
t one
com
petit
or u
nion
pro
vide
s a
defin
ed b
enef
it pl
an a
s pa
rt of
its
retir
emen
t pr
ogra
m; n
one
of th
e pl
ans
requ
ire a
ny
empl
oyee
con
tribu
tion
■Th
e pl
ans
vary
in d
esig
n –
abou
t hal
f offe
r a
tradi
tiona
l fin
al p
ay o
r car
eer p
ay p
lan
and
half
offe
r a h
ybrid
acc
ount
-bas
ed d
esig
n (c
ash
bala
nce
or p
ensi
on e
quity
); on
ly o
ne u
nion
pr
ovid
es a
flat
dol
lar (
non-
pay
rela
ted)
des
ign
■N
atio
nal G
rid’s
New
Yor
k U
nion
pla
n is
rank
ed
belo
w th
e co
mpe
titor
gro
up a
vera
ge.
It is
ra
nked
alo
ng-s
ide
the
othe
r cas
h ba
lanc
e an
d pe
nsio
n eq
uity
des
igns
, whi
ch ty
pica
lly d
o no
t in
clud
e si
gnifi
cant
ear
ly re
tirem
ent s
ubsi
dies
. M
ost o
f the
se p
lans
do
offe
r a fu
ll lu
mp
sum
be
nefit
upo
n te
rmin
atio
n.
■N
atio
nal G
rid’s
New
Eng
land
Uni
on p
lan
is
rank
ed a
bove
the
com
petit
or g
roup
ave
rage
. It
is ra
nked
alo
ng-s
ide
the
othe
r tra
ditio
nal f
inal
pa
y an
d/or
car
eer p
ay ty
pe d
esig
ns, w
hich
ty
pica
lly in
clud
e ge
nero
us e
arly
retir
emen
t pr
ovis
ions
and
/or a
n au
tom
atic
CO
LAs
prov
isio
n
NGG
-U
NGG
NUNG
G-U
NGG
NUF
BL
DH
GK
JA
IM
CE
N
FB
LD
HG
KJ
AI
MC
EN
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 12 of 54
100
12©
2008
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ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Def
ined
Con
trib
utio
n
■A
ll of
the
com
petit
or re
tirem
ent p
rogr
ams
incl
ude
a de
fined
con
tribu
tion
com
pone
nt;
mos
t typ
ical
ly it
incl
udes
onl
y an
em
ploy
er
savi
ngs
plan
mat
chin
g co
ntrib
utio
n, b
ut a
fe
w c
ompe
titor
s al
so p
rovi
de a
com
pany
au
tom
atic
or p
rofit
sha
ring
elem
ent i
n th
e sa
ving
s pl
an
■A
bout
hal
f of t
he c
ompe
titor
pro
gram
s al
so
incl
ude
a se
para
te s
tock
pur
chas
e pl
an w
ith
a sm
all p
urch
ase
disc
ount
■N
atio
nal G
rid’s
New
Yor
k U
nion
pla
n pr
ovid
es a
low
er e
mpl
oyer
mat
chin
g co
ntrib
utio
n (5
0% o
n 6%
or m
ax. o
f 3%
em
ploy
er) w
hich
pla
ces
it be
low
the
com
petit
or g
roup
ave
rage
■N
atio
nal G
rid’s
New
Eng
land
Uni
on p
lan
prov
ides
an
empl
oyer
mat
chin
g co
ntrib
utio
n (1
00%
on
first
2%
, 50%
on
next
4%
or m
ax.
of 4
% e
mpl
oyer
), w
hich
pla
ces
it at
abo
ut
the
com
petit
or g
roup
ave
rage
■Li
ke N
atio
nal G
rid’s
sav
ings
pla
ns, t
he
maj
ority
of c
ompa
nies
pro
vide
for i
mm
edia
te
vest
ing
of e
mpl
oyer
con
tribu
tions
; sev
eral
pr
ovid
e fo
r aut
o-en
rollm
ent
NGG- U
NGG
NU
NGG- U
NGG
NU
BF
CD
GL
KJ
MA
EI
NH
BF
CD
MG
EI
KJ
LA
NH
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 13 of 54
101
13©
2008
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ers
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inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Def
ined
Ben
efit
+ D
efin
ed C
ontr
ibut
ion
■A
ll bu
t one
of t
he c
ompe
titor
uni
on
retir
emen
t pro
gram
s in
clud
e bo
th a
def
ined
be
nefit
and
def
ined
con
tribu
tion
com
pone
nt, s
imila
r to
the
desi
gn o
f N
atio
nal G
rid’s
uni
on p
rogr
ams
■S
imila
r to
Nat
iona
l Grid
’s p
rogr
ams,
the
maj
ority
of t
he e
mpl
oyer
-pro
vide
d re
tirem
ent v
alue
is p
rovi
ded
thro
ugh
the
defin
ed b
enef
it pl
an
■N
atio
nal G
rid’s
New
Eng
land
uni
on
prog
ram
is ra
nked
abo
ve th
e co
mpe
titor
gr
oup
aver
age,
con
sist
ent w
ith th
e ab
ove
aver
age
rank
ing
for i
ts d
efin
ed b
enef
it pl
an
(com
bine
d w
ith it
s ab
out a
vera
ge ra
nkin
g fo
r its
def
ined
con
tribu
tion
plan
)
■N
atio
nal G
rid’s
New
Yor
k U
nion
pro
gram
is
rank
ed s
igni
fican
tly b
elow
the
com
petit
or
grou
p av
erag
e, c
onsi
sten
t with
the
belo
w
com
petit
or g
roup
ave
rage
rank
ing
for b
oth
its d
efin
ed b
enef
it an
d de
fined
con
tribu
tion
com
pone
nts
NGGN U
NGG- U
NGG- U
NGGN U
FE
GL
BK
JN
CH
AM
DI
AE
CG
FM
LK
JB
NI
DH
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 14 of 54
102
14©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t M
edic
al S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Eng
land
and
New
Yor
k U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
ofpo
st-re
tirem
ent m
edic
al
Post
-retir
emen
t Med
ical
Sco
re a
nd R
ank Sc
ore
Rank
/16
Empl
oyer
Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
268.
61
Nat
iona
l Grid
New
Eng
land
Uni
on37
.814
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
176.
61
Nat
iona
l Grid
New
Eng
land
Uni
on60
.913
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 15 of 54
103
15©
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ers
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ropr
ieta
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onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t M
edic
al C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pla
n de
sign
s
Key
Pla
n De
sign
Fea
ture
s - P
ost-r
etir
emen
t Med
ical
Nat
iona
l Grid
New
Yor
k Un
ion
Nat
iona
l Grid
New
Eng
land
Uni
on
Pre
-65
Type
of P
lan
PO
SP
OS
Pla
n D
esig
nS
ame
as a
ctive
Sam
e as
act
iveP
artic
ipat
ion
Req
uire
men
tsA
ge 5
5 &
10
YO
S a
fter a
ge 4
5A
ge 6
1 &
10
YO
S o
r Age
60
and
&
Age
+Ser
vice
= 85
Def
ined
Dol
lar B
enef
itN
one
Non
e
Pos
t-65
Type
of P
lan
PO
SM
edic
are
Sup
plem
ent
Par
ticip
atio
n R
equi
rem
ents
10 y
ears
of s
ervic
e af
ter a
ge 4
5A
ge+s
ervic
e =
85 o
r 10
YO
SP
lan
Des
ign
Sam
e as
act
iveD
educ
tible
Per
son:
$10
0; F
amily
Max
: non
eO
ut-o
f-poc
ket m
axim
umP
erso
n: n
one;
Fam
ily M
ax: n
one
Pre
scrip
tion
Dru
gs (r
etai
l)G
ener
ic10
0%B
rand
80%
Coo
rdin
atio
n w
ith M
edic
are
Ben
efit
redu
ced
by M
edic
are
bene
fitM
edic
are
Par
t 'A
'N
/A10
0% o
f Par
t 'A
' ded
uctib
le, 1
00%
of P
art
'A' c
o-pa
y be
fore
ded
uctib
leM
edic
are
Par
t 'B
'N
/A10
0% o
f Par
t 'B
' ded
uctib
le, 1
00%
of P
art
'B' c
oins
uran
ce b
efor
e de
duct
ible
Med
icar
e P
art '
B' P
rem
ium
Non
eN
one
Def
ined
dol
lar B
enef
itN
one
Ret
iree:
$54
x s
ervic
e; R
etire
e +
Spo
use:
$1
08 x
ser
vice
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 16 of 54
104
16©
2008
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ers
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inP
ropr
ieta
ry a
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onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t M
edic
al
■Th
e N
atio
nal G
rid N
ew Y
ork
Uni
on p
ost-
retir
emen
t med
ical
pla
n is
rank
ed a
t the
ver
y to
p of
the
peer
gro
up, w
ith a
pla
n va
lue
sign
ifica
ntly
ab
ove
the
peer
gro
up a
vera
ge.
This
is th
e re
sult
of:
■R
elat
ivel
y lo
w re
tiree
con
tribu
tions
,
■U
ncap
ped
empl
oyer
con
tribu
tions
,
■C
ompr
ehen
sive
PO
S pl
an d
esig
n,
■E
ligib
ility
for l
ifetim
e co
vera
ge a
t age
55
and
10 y
ears
of s
ervi
ce
■Th
e N
atio
nal G
rid N
ew E
ngla
nd U
nion
pos
t-re
tirem
ent m
edic
al p
lan
is ra
nked
sig
nific
antly
be
low
the
peer
gro
up a
vera
ge a
s a
resu
lt of
:
■C
aps
on th
e em
ploy
er c
ontri
butio
n
■Pr
e-M
edic
are
elig
ibilit
y lim
ited
to re
tiree
s ag
e 60
■M
edic
are
supp
lem
ent d
esig
n fo
r pos
t-65
cove
rage
NGGN
UNG
G-U
NGGN
UNG
G-U
AE
BC
KJ
IH
DL
MN
GF
HE
MB
DL
FI
CK
JN
GA
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 17 of 54
105
17©
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Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t D
eath
Sco
re a
nd R
ank
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Eng
land
and
New
Yor
k U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
ofpo
st-re
tirem
ent d
eath
Pos
t-ret
irem
ent D
eath
Sco
re a
nd R
ank Sc
ore
Rank
/16
Empl
oyer
Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
0.0
tied
for l
ast w
/ 5
othe
r com
pani
es
Nat
iona
l Grid
New
Eng
land
Uni
on43
.39
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
0.0
tied
for l
ast w
/ 4
othe
r com
pani
es
Nat
iona
l Grid
New
Eng
land
Uni
on38
.711
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 18 of 54
106
18©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t D
eath
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pla
n de
sign
s
Post
-retir
emen
t Dea
th B
enef
it
Nat
iona
l Gri
d N
ew Y
ork
Uni
on
Nat
iona
l Gri
d N
ew E
ngla
nd U
nion
Ty
pe o
f cov
erag
eN
o po
st-re
tirem
ent c
over
age
Bas
ic L
ifeP
artic
ipat
ion
Req
uire
men
tsN
/AA
ge 6
1 &
10
YO
S o
r Age
60
&
age+
serv
ice
= 65
Mon
thly
Con
tribu
tions
N/A
Non
eE
arly
Ret
irem
ent C
over
age
N/A
Sam
e as
Nor
mal
Ret
irem
ent
Nor
mal
Ret
irem
ent C
over
age
N/A
Red
uced
imm
edia
tely
to $
12,5
00 fo
r life
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 19 of 54
107
19©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Pos
t-re
tire
men
t D
eath
■N
atio
nal G
rid’s
uni
on p
ost-r
etire
men
t dea
th p
lans
ar
e ra
nked
sig
nific
antly
bel
ow th
e co
mpe
titor
gro
up
aver
age
■Th
e N
ew Y
ork
unio
n do
es n
ot h
ave
a po
st-
retir
emen
t dea
th b
enef
it an
d th
e N
ew E
ngla
nd
unio
n ha
s a
low
er th
an a
vera
ge b
enef
it le
vel
■Fo
ur p
eer c
ompa
nies
(D, I
, M, a
nd N
) alo
ng w
ith
Nat
iona
l Grid
’s N
ew Y
ork
Uni
on, d
o no
t offe
r any
po
st-re
tirem
ent d
eath
ben
efit
■L
and
G, w
hich
are
rank
ed fi
rst a
nd s
econ
d re
spec
tivel
y, o
ffer a
dea
th b
enef
it th
at o
nly
grad
ually
redu
ces
afte
r ret
irem
ent,
until
the
bene
fit
reac
hes
a m
axim
um o
f 25%
of t
he p
re-re
tirem
ent
deat
h be
nefit
■N
atio
nal G
rid’s
New
Eng
land
Uni
on p
lan
redu
ces
the
bene
fit im
med
iate
ly u
pon
retir
emen
t to
$12,
500
for l
ife
NGG-
UNG
GNU
NGG-
UNG
GNU
MG
AB
KJ
CF
HD
EI
LN
MG
AB
HF
KJ
CE
DI
LN
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 20 of 54
108
20©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ret
irem
ent
Eve
nt S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Eng
land
and
New
Yor
k U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
ofto
tal r
etire
men
t eve
nts
Retir
emen
t Eve
nt S
core
and
Ran
k
Scor
eR
ank/
16Em
ploy
er V
alue
Nat
iona
l Grid
New
Yor
k U
nion
123.
24
Nat
iona
l Grid
New
Eng
land
Uni
on93
.310
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
99.5
8
Nat
iona
l Grid
New
Eng
land
Uni
on92
.110
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 21 of 54
109
21©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Ret
irem
ent
Eve
nt
■Th
e R
etire
men
t Eve
nt c
ompa
rison
pro
vide
s an
ass
essm
ent o
f all
of th
e be
nefit
s av
aila
ble
upon
retir
emen
t (de
fined
ben
efit/
defin
ed
cont
ribut
ion
bene
fits
and
post
-retir
emen
t m
edic
al/d
eath
ben
efits
)
■Ba
sed
on th
e em
ploy
er-p
rovi
ded
valu
e, th
e N
atio
nal G
rid N
ew Y
ork
Uni
on p
rogr
am is
si
gnifi
cant
ly a
bove
the
com
petit
or g
roup
av
erag
e, p
rimar
ily d
ue to
the
rich
post
-re
tirem
ent m
edic
al b
enef
its a
vaila
ble
to
retir
ees
■Ba
sed
on th
e em
ploy
er-p
rovi
ded
valu
e, th
e N
atio
nal G
rid N
ew E
ngla
nd U
nion
pro
gram
is
just
slig
htly
bel
ow a
vera
ge, d
ue to
a h
ighe
r th
an a
vera
ge re
tirem
ent (
defin
ed
bene
fit/d
efin
ed c
ontri
butio
n) v
alue
offs
et b
y lo
wer
than
ave
rage
pos
t-ret
irem
ent m
edic
al
and
deat
h pl
an v
alue
s
NGGN
UNG
G-U
NGGN
UNG
G-U
AE
BK
JD
CL
NH
MI
GF
HD
GM
BL
FC
KJ
IN
EA
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 22 of 54
110
Act
ive
Ben
efit
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 23 of 54
111
23©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Pla
n D
eliv
ery
Mod
els
All
com
pani
es, e
xcep
t A, D
, and
F o
ffer t
heir
empl
oyee
s a
choi
ceof
pla
n ty
pe
Mos
t com
pani
es th
at o
ffer p
lans
with
an
in-n
etw
ork
and
out-o
f-net
wor
k fe
atur
e of
fer
a P
PO
rath
er th
an a
PO
S p
lan
Eig
ht c
ompa
nies
hav
e a
PP
O p
lan
as th
eir h
ighe
st e
nrol
led
plan
—
One
com
petit
or c
ompa
ny h
as a
PO
S p
lan
as th
eir h
ighe
st e
nrol
led
plan
, alo
ng
with
bot
h N
atio
nal G
rid U
nion
pla
ns—
Five
com
petit
or c
ompa
nies
hav
e an
HM
O p
lan
as th
e hi
ghes
t enr
olle
d pl
an
J an
d K
are
the
only
com
pani
es to
offe
r the
ir em
ploy
ees
a co
nsum
er d
riven
hea
lth
plan
For p
urpo
ses
of th
e B
EN
VA
L, w
e ev
alua
ted
only
the
optio
n w
ith h
ighe
st e
nrol
lmen
t
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 24 of 54
112
24©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Ben
efit
Sco
re a
nd R
ank
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Eng
land
and
New
Yor
k U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
of a
ctiv
e m
edic
al p
rogr
ams
Nat
iona
l Grid
’s N
ew Y
ork
Uni
on is
rank
ed 6
thin
term
s of
tota
l val
ue, a
nd th
eir N
ew E
ngla
nd
Uni
on is
rank
ed 8
thin
term
s of
tota
l val
ueTh
e N
ew Y
ork
Uni
on ra
nkin
g m
oves
up
slig
htly
to 5
thin
term
s of
Em
ploy
er V
alue
bec
ause
th
eir e
mpl
oyee
and
em
ploy
ee+1
con
tribu
tions
are
bel
ow th
e av
erag
e (a
lthou
gh th
eir f
amily
co
ntrib
utio
n is
abo
ve th
e av
erag
e) fo
r the
com
petit
or g
roup
, and
the
New
Eng
land
Uni
on
rank
ing
mov
es d
own
slig
htly
to 9
thbe
caus
e th
eir c
ontri
butio
ns a
re a
bove
the
aver
age
for t
he
com
petit
or g
roup
810
2.1
Nat
iona
l Grid
New
Eng
land
Uni
on
610
4.2
Nat
iona
l Grid
New
Yor
k U
nion
Tota
l Val
ue
996
.9N
atio
nal G
rid N
ew E
ngla
nd U
nion
510
4.0
Nat
iona
l Grid
New
Yor
k U
nion
Empl
oyer
Val
ue
Ran
k/16
Sc
ore
Act
ive
Med
ical
Sco
re a
nd R
ank
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 25 of 54
113
25©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Ben
efit
s C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Key
Pla
n D
esig
n Fe
atur
es -
Med
ical
Nat
iona
l Gri
d N
ew Y
ork
Uni
on
Nat
iona
l Gri
d N
ew E
ngla
nd U
nion
R
ange
Ave
rage
Mod
eIn
-net
wor
kD
educ
tible
Per
Em
ploy
ee: $
0, F
amily
Max
: $0
Per
Em
ploy
ee: $
0, F
amily
Max
: $0
Per
Em
ploy
ee: $
0-$3
00,
Fam
ily M
ax: $
0-$6
00P
er E
mpl
oyee
: $71
.43,
Fa
mily
Max
: $14
2.86
Per
Em
ploy
ee: $
0,
Fam
ily M
ax: $
0C
oins
uran
ce10
0%10
0%80
% --
100
%98
%10
0%O
ut-o
f-poc
ket m
axim
umP
er E
mpl
oyee
: $0,
Fam
ily M
ax: $
0P
er E
mpl
oyee
: $0,
Fam
ily M
ax: $
0P
er E
mpl
oyee
: $0-
$150
0,
Fam
ily M
ax: $
0-$3
000
Per
son:
$93
0, F
amily
Max
: $2
250
(am
ong
plan
s th
at
have
an
OO
P m
ax)
Per
Em
ploy
ee: $
0,
Fam
ily M
ax: $
0
Inpa
tient
hos
pita
l10
0%10
0%80
% --
100
%N
/A10
0%E
mer
genc
y ro
om10
0%, $
35 c
o-pa
y/vis
it (w
aive
d if
adm
itted
) 10
0%90
% --
100
%99
%, $
35 c
o-pa
y10
0%, $
50 c
o-pa
y/vis
it (w
aive
d if
adm
itted
)O
ffice
vis
itsP
rimar
y: 1
00%
, $10
co-
pay;
Spe
cial
ist:
100%
, $15
co-
pay
100%
, $10
co-
pay
100%
, $20
co-
pay
-- 10
0%
$10
co-p
ay/v
isit
100%
, $15
co-
pay
100%
, $20
co-
pay
Pre
scrip
tion
drug
s (R
etai
l)G
ener
ic80
%, $
5 m
in, $
15 m
ax10
0%, $
10 c
o-pa
y80
%, $
5 m
in, $
25 m
ax c
o-pa
y --
100%
, $5
co-p
ay95
%, $
7.11
co-
pay
100%
, $5
co-p
ay
Bra
nd80
%, $
5 m
in, $
15 m
axFo
rm: 1
00%
, $10
co-
pay;
Non
-form
: 10
0%, $
30 c
o-pa
yFo
rm: 7
5%, $
15 m
in, $
25
max
co-
pay;
Non
For
m:
55%
, $35
min
, $60
max
$ c
o-pa
y --
100
%, $
10 c
o-pa
y
Form
: 88%
, $16
co-
pay;
N
on-F
orm
: 79
%, $
27 c
o-pa
y
Form
: 100
%, $
20 c
o-pa
y; N
on-F
orm
: 100
%,
$35
co-p
ay
Out
patie
nt m
enta
l hea
lth10
0% fi
rst 1
0 vis
its/y
ear,
90%
nex
t 10
visits
/yea
r, th
en 8
0%10
0%, $
5 co
-pay
/vis
it, 2
4 vis
its/y
ear
50%
, 20
visits
/yea
r -- 1
00%
, $2
0 co
-pay
/vis
it (n
o lim
it)85
%, $
12 c
o-pa
y/vis
it, 3
6 vis
its/y
ear
50%
, 20
visits
/yea
r
Out
-of-n
etw
ork
Ded
uctib
leP
erso
n: $
250,
Fam
ily M
ax: $
500
Per
son:
$20
0, F
amily
Max
: $40
0N
o O
ON
cov
erag
e --
Per
son:
$1
50, F
amily
Max
: $30
0P
erso
n: $
392,
Fam
ily M
ax:
$925
No
OO
N c
over
age
(am
ong
all p
lans
)C
oins
uran
ce80
%70
%N
o O
ON
cov
erag
e --
80%
77%
(am
ong
plan
s w
ith a
n O
ON
opt
ion)
80%
Out
-of-p
ocke
t max
imum
Per
son:
$1,
250,
Fam
ily M
ax: $
2,50
0 (in
clud
es d
educ
tible
)P
erso
n: $
1,30
0, F
amily
Max
: $1,
900
(incl
udes
ded
uctib
le)
No
OO
N c
over
age
-- P
erso
n:
$125
0, F
amily
Max
: $25
00
(incl
udes
ded
uctib
le)
Per
son:
$23
00, F
amily
M
ax: $
4900
No
OO
N c
over
age
Mon
thly
Em
ploy
ee C
ontr
ibut
ions
Em
ploy
ee o
nly
$78.
17
$99.
91
$25
-- $1
45.1
3$7
8.86
N
/AFa
mily
$222
.77
$284
.74
$25
-- $4
06.3
6$2
04.2
0 N
/A
Com
pari
tor
Gro
up
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 26 of 54
114
26©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Ben
efit
s
Whi
le b
oth
Nat
iona
l Grid
Uni
ons
fall
in li
ne w
ith th
e co
mpe
titor
grou
p fo
r pro
visi
ons
such
as
dedu
ctib
les
(non
e), c
oins
uran
ce (1
00%
), O
OP
(non
e), a
nd in
patie
nt h
ospi
tal (
100%
), th
ere
are
diffe
renc
es w
hen
it co
mes
to th
e ot
her b
enef
its
The
New
Yor
k U
nion
is ra
nked
slig
htly
hig
her t
han
othe
r com
petit
or c
ompa
nies
bec
ause
thei
r of
fice
visi
t cop
ay o
f $10
($15
spe
cial
ist)
is lo
wer
than
the
aver
age
of $
15, a
nd m
ode
of $
20 fo
r th
e co
mpe
titor
gro
upA
dditi
onal
ly, t
heir
pres
crip
tion
drug
ben
efit
is 8
0% w
ith a
min
imum
of $
5 an
d m
axim
um o
f $1
5 re
gard
less
of d
rug
tier,
whi
ch is
abo
ut a
vera
ge a
s co
mpa
red
to th
e co
mpe
titor
gro
up fo
r ge
neric
dru
gs, b
ut is
rich
er th
an th
e co
mpe
titor
mod
e of
a $
20 c
opay
for b
rand
form
ular
y dr
ugs,
and
a $
35 c
opay
for b
rand
non
-form
ular
y dr
ugs
The
outp
atie
nt m
enta
l hea
lth b
enef
it is
als
o m
uch
riche
r tha
n th
e co
mpe
titor
gro
up’s
ou
tpat
ient
men
tal h
ealth
ben
efit-
100%
for t
he fi
rst 1
0 vi
sits
, 90%
for t
he n
ext 1
0 vi
sits
, the
n 80
% fo
r the
follo
win
g vi
sits
with
no
num
ber o
f vis
it lim
itatio
ns, a
s co
mpa
red
to th
e co
mpe
titor
s’av
erag
e be
nefit
of 8
5% c
over
age
with
a $
12 c
opay
for a
max
imum
of 3
6 vi
sits
pe
r yea
r, an
d a
com
petit
or g
roup
mod
e of
50%
cov
erag
e w
ith 2
0 vi
sits
per
yea
r—
Alth
ough
the
New
Yor
k U
nion
’s la
ck o
f vis
it lim
its fo
r men
tal h
ealth
ben
efits
is g
ener
ous,
w
e ex
pect
it to
be
in li
ne w
ith th
e av
erag
e as
oth
er u
nion
pla
nsm
ove
to c
ompl
y w
ith th
e re
cent
ly p
asse
d M
enta
l Hea
lth P
arity
law
effe
ctiv
e in
201
0O
f the
com
petit
or c
ompa
nies
that
offe
r an
out-o
f-net
wor
k be
nefit
, the
New
Yor
k U
nion
pla
n is
co
mpa
rativ
ely
riche
r in
term
s of
ded
uctib
les
and
out-o
f-poc
ket m
axim
ums
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 27 of 54
115
27©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Ben
efit
s
The
New
Eng
land
Uni
on is
rank
ed in
the
mid
dle
of th
e pa
ck re
lativ
e to
the
com
petit
or g
roup
(a
lthou
gh s
light
ly lo
wer
than
the
New
Yor
k U
nion
)Th
e N
ew E
ngla
nd U
nion
pre
scrip
tion
drug
ben
efit
of a
$10
cop
ay fo
r gen
eric
s is
slig
htly
hi
gher
than
the
com
petit
or g
roup
’s m
ode
of a
$5
copa
y fo
r gen
eric
s, b
ut is
mor
e ge
nero
us in
te
rms
of b
rand
dru
gs—
Form
ular
y dr
ugs
have
a c
opay
of $
10 a
nd n
on-fo
rmul
ary
drug
s ha
ve a
cop
ay o
f $30
, as
com
pare
d to
the
com
petit
or g
roup
’s m
ode
of a
$20
cop
ay fo
r for
mul
ary
drug
s, a
nd a
$35
co
pay
for n
on-fo
rmul
ary
drug
sTh
e N
ew E
ngla
nd U
nion
out
patie
nt m
enta
l hea
lth b
enef
it is
als
o m
uch
riche
r tha
n th
e co
mpe
titor
gro
ups’
outp
atie
nt m
enta
l hea
lth b
enef
it-$5
cop
ay p
er v
isit,
com
pare
d to
the
com
petit
or g
roup
’s a
vera
ge b
enef
it of
85%
cov
erag
e w
ith a
$12
cop
ay p
er v
isit,
and
a
com
petit
or g
roup
mod
e of
50%
cov
erag
e pe
r vis
it—
Thei
r vis
it lim
it of
24
visi
ts p
er y
ear i
s le
ss th
an th
e co
mpe
titor
gro
up a
vera
ge o
f 36
visi
ts
per y
ear,
but s
light
ly m
ore
than
the
com
petit
or g
roup
mod
e of
20
visi
ts p
er y
ear
Of t
he c
ompe
titor
com
pani
es th
at o
ffer a
n ou
t-of-n
etw
ork
bene
fit, t
he N
ew E
ngla
nd U
nion
pl
an is
com
para
tivel
y ric
her i
n te
rms
of d
educ
tible
s an
d ou
t-of-p
ocke
t max
imum
s, b
ut s
light
ly
low
er in
term
s of
coi
nsur
ance
(70%
ver
sus
an a
vera
ge/m
ode
of 8
0%fo
r com
petit
or
com
pani
es)
The
offic
e vi
sit c
opay
of $
10 is
the
one
prov
isio
n w
here
the
New
Eng
land
Uni
on is
not
onl
y ric
her t
han
the
com
petit
or g
roup
’s a
vera
ge a
nd m
ode,
but
als
o ric
her t
han
the
New
Yor
k U
nion
ben
efit
(see
pre
viou
s pa
ge)
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 28 of 54
116
28©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Act
ive
Med
ical
Ben
efit
s
The
follo
win
g ba
r ch
art f
urth
er
illust
rate
s ho
w
Nat
iona
l Grid
’s N
ew
Yor
k an
d N
ew
Engl
and
Uni
on p
lans
co
mpa
re to
thei
r pe
ers
both
in te
rms
of g
ross
ben
efit
valu
e of
med
ical
pl
ans,
as
wel
l as
empl
oyer
-pro
vide
d va
lue
(i.e.
, net
of
empl
oyee
co
ntrib
utio
ns)
CG
IB
NK
EJ
HF
DA
LM
HG
KJ
BA
EI
ND
MF
LC
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 29 of 54
117
29©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Den
tal B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
’s
com
petit
ive
posi
tioni
ng re
lativ
e to
thei
r pee
r gro
up in
term
s of
activ
e de
ntal
pr
ogra
ms
In te
rms
of b
oth
Em
ploy
er V
alue
and
Tot
al V
alue
, the
New
Yor
k U
nion
is s
light
ly
abov
e av
erag
e, w
hile
the
New
Eng
land
Uni
on is
bel
ow a
vera
ge
1385
.2N
atio
nal G
rid N
ew E
ngla
nd U
nion
610
3.7
Nat
iona
l Grid
New
Yor
k U
nion
Tota
l Val
ue
1379
.0N
atio
nal G
rid N
ew E
ngla
nd U
nion
610
2.4
Nat
iona
l Grid
New
Yor
k U
nion
Empl
oyer
Val
ueR
ank/
16
Scor
e D
enta
l Sco
re a
nd R
ank
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 30 of 54
118
30©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Den
tal B
enef
its
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Den
tal B
enef
it
Nat
iona
l Gri
d N
ew Y
ork
Uni
on
Nat
iona
l Grid
New
Eng
land
Un
ion
Rang
eAv
erag
eM
ode
Ann
ual D
educ
tible
*P
erso
n: $
50, F
amily
Max
: Non
eP
erso
n: $
50, F
amily
Max
: $15
0P
erso
n: $
0-$5
0; F
amily
Max
: N
one-
$150
Per
son:
$39
.29;
Fa
mily
Max
: $1
01.7
9
Per
son:
$50
; Fa
mily
Max
: $1
50A
nnua
l Max
imum
Pre
vent
ive &
Bas
ic: $
1500
/per
son,
M
ajor
: $20
00/p
erso
n (e
xclu
des
orth
odon
tia)
$100
0/pe
rson
(exc
lude
s or
thod
ontia
)$1
000/
pers
on --
$250
0/pe
rson
(e
xclu
des
orth
odon
tia)
$165
7 (e
xclu
des
orth
odon
tia)
$150
0 (e
xclu
des
orth
odon
tia)
Cle
anin
g10
0%, 2
cle
anin
gs/y
ear
100%
, 2 c
lean
ings
/yea
r75
% --
100
% (2
cl
eani
ngs/
year
)98
%, 2
cl
eani
ngs/
year
100%
, 2
clea
ning
s/ye
arN
on-G
old
Filli
ng80
%80
%60
% -
80%
,incr
easi
ng b
y 10
%/y
ear t
o 10
0%78
%80
%
Cro
wns
60%
50%
, eve
ry 5
yea
rs50
% e
very
8 y
ears
-- 7
0%58
%, e
very
3.6
ye
ars
50%
, eve
ry 5
ye
ars
Orth
odon
tia C
over
age
100%
50%
Not
cov
ered
-- 1
00%
63%
(am
ong
plan
s th
at
incl
ude
orth
o.
cove
rage
)
50%
Orth
odon
tia M
axim
um$1
,800
per
life
time
$1,5
00 p
er li
fetim
e$0
-- $
3000
$1,9
67
$2,0
00
Orth
odon
tia E
ligib
ility
Adu
lt or
thod
ontia
Chi
ldre
n to
age
19
Not
cov
ered
-- a
dult
orth
odon
tiaN
/AC
hild
ren
to a
ge
19M
onth
ly E
mpl
oyee
Con
tribu
tions
Em
ploy
ee$7
.35
$7.6
1 $0
-- $
17.3
3$6
.73
N/A
Fam
ily$2
0.94
$2
1.70
$0
-- $
49.8
9$1
8.19
N/A
Out
of N
etw
ork
Ded
uctib
leN
/AN
/AP
erso
n: $
175,
Fam
ily M
ax:
none
-- P
erso
n: $
25, F
amily
M
ax: $
50
Per
son:
$80
, Fa
mily
Max
: $2
30
No
OO
N
cove
rage
Ann
ual M
axim
umN
/AN
/A$1
000
-- $2
000
(exc
lude
s or
thod
ontia
)$1
,600
$1
,500
* Fo
r pur
pose
s of
cal
cula
ting
aver
ages
, we
assu
med
3X
for f
amily
max
imum
if th
ere
is n
o lim
it
Com
parit
or G
roup
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 31 of 54
119
31©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Den
tal B
enef
its
The
com
petit
ive
posi
tioni
ng fo
r New
Yor
k U
nion
’s d
enta
l pla
n as
com
pare
d to
the
com
petit
or g
roup
is la
rgel
y dr
iven
by
thei
r ave
rage
to b
ette
r-th
an-a
vera
ge, p
lan
prov
isio
ns
The
New
Yor
k U
nion
pla
n of
fers
a s
epar
ate
annu
al m
axim
um o
f $2,
000
for m
ajor
se
rvic
es, a
nd $
1,50
0 fo
r pre
vent
ive
and
basi
c se
rvic
es, w
hich
no
othe
r com
pany
of
fers
; all
othe
r uni
on b
enef
it pr
ogra
ms
have
a s
ingl
e ca
lend
ar y
ear m
axim
um fo
r al
l ser
vice
s (e
xclu
ding
orth
odon
tia)
Add
ition
ally
, the
New
Yor
k U
nion
pla
n co
vers
maj
or s
ervi
ces
at 6
0%, w
hile
the
maj
ority
of c
ompe
titor
com
pani
es c
over
thes
e se
rvic
es a
t 50%
The
New
Yor
k U
nion
den
tal p
lan
falls
in li
ne w
ith th
e co
mpe
titor
grou
p’s
aver
age
and
mea
n fo
r pro
visi
ons
such
as
the
$50
empl
oyee
ded
uctib
le, 1
00%
pre
vent
ive
cove
rage
, and
80%
bas
ic s
ervi
ces
cove
rage
The
plan
cov
ers
orth
odon
tia a
t 100
%, a
nd o
nly
thre
e ot
her c
ompe
titor
com
pani
es
(J, K
, and
I) a
lso
cove
r orth
odon
tia a
t 100
%; t
he m
ajor
ity o
f com
pani
es th
at c
over
or
thod
ontia
, cov
er th
e be
nefit
at 5
0%—
Alth
ough
the
100%
orth
odon
tia b
enef
it ap
pear
s m
ore
gene
rous
, the
lifet
ime
orth
odon
tia m
axim
um d
rives
val
ue s
ince
alm
ost a
ll m
embe
rs re
ceiv
ing
orth
odon
tia s
ervi
ces
will
reac
h th
e m
axim
um; t
he N
ew Y
ork
Uni
on’s
or
thod
ontia
max
imum
is $
1,80
0, a
s co
mpa
red
to th
e co
mpe
titor
gro
up’s
av
erag
e/m
ode
of $
2,00
0
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 32 of 54
120
32©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Den
tal B
enef
its
—A
noth
er im
porta
nt d
river
of o
rthod
ontia
ben
efits
is e
ligib
ility
;the
New
Yor
k U
nion
co
vers
adu
lt or
thod
ontia
, whi
ch is
a m
uch
riche
r ben
efit
than
onl
y co
verin
g ch
ildre
n up
to a
ge 1
9, w
hich
is w
hat t
he m
ajor
ity o
f the
com
petit
or c
ompa
nies
offe
r if t
hey
cove
r orth
odon
tiaTh
e N
ew Y
ork
Uni
on d
enta
l pla
n is
slig
htly
less
rich
than
thei
r com
petit
or g
roup
in
term
s of
thei
r hig
her t
han
aver
age
empl
oyee
con
tribu
tions
The
New
Eng
land
Uni
on d
enta
l pla
n is
val
ued
muc
h lo
wer
than
the
aver
age
plan
be
caus
e w
hile
thei
r pre
vent
ive,
bas
ic, a
nd o
rthod
ontia
cov
erag
e le
vels
fall
with
in th
e av
erag
e an
d m
ode
of th
e co
mpe
titor
gro
up, t
heir
annu
al m
axim
um is
$1,
000
as
com
pare
d to
the
aver
age
of $
1,65
7 an
d m
ode
of $
1,50
0 fo
r the
com
petit
or g
roup
, and
th
eir c
ontri
butio
ns a
re m
ore
than
10%
hig
her t
han
the
com
petit
orgr
oup
aver
age
Add
ition
ally
, the
New
Eng
land
Uni
on o
rthod
ontia
max
imum
of $
1,50
0 is
low
er th
an th
e co
mpe
titor
gro
up a
vera
ge/m
ode
of $
2,00
0
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 33 of 54
121
33©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Den
tal B
enef
its
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
ans
com
pare
to th
eir
peer
s bo
th in
term
s of
gr
oss
bene
fit v
alue
of
dent
al p
lans
, as
wel
l as
empl
oyer
-pro
vide
d va
lue
(i.e.
, net
of e
mpl
oyee
co
ntrib
utio
ns)
CG
LH
KI
FA
ME
JD
BN
DG
HK
JF
IA
EL
NM
BC
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 34 of 54
122
34©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Life
Ins
uran
ce/A
D&
D B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
of li
fe in
sura
nce
and
AD
&D
pro
gram
s
Bot
h N
atio
nal G
rid u
nion
life
Insu
ranc
e/A
D&
D p
lans
are
com
petit
ive
as c
ompa
red
to th
eir
peer
s, a
nd b
oth
scor
e w
ell a
bove
the
aver
age
plan
Life
Insu
ranc
e/A
D&D
- Ac
tive
Sco
re a
nd R
ank
Sco
reRa
nk/1
6Em
ploy
er V
alue
Nat
iona
l Grid
New
Yor
k U
nion
164.
43
Nat
iona
l Grid
New
Eng
land
Uni
on14
0.7
6
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
134.
94
Nat
iona
l Grid
New
Eng
land
Uni
on11
9.3
6
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 35 of 54
123
35©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Life
Ins
uran
ce/A
D&
D C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Life
Insu
ranc
e/A
D&
D B
enef
it
Nat
iona
l Gri
d N
ew Y
ork
Uni
onN
atio
nal G
rid
New
Eng
land
U
nion
R
ange
A
vera
ge
Mod
eB
asic
2.5
x pa
y2
x pa
y$5
,000
--
2 x
pay
; if
age+
serv
ice=
85: 4
x
pay
1 x
pay
1 x
pay
Max
imum
$6
25,0
00
$200
,000
$5
,000
--
No
Max
$441
,000
$1
,000
,000
S
u ppl
emen
tal
Em
ploy
ee o
ptio
n1
to 5
x p
ay in
mul
tiple
s of
1
x pa
y1
to 5
x p
ay in
mul
tiple
s of
1x
pay
Non
e --
$10
,000
to
$2,0
00,0
00 in
m
ultip
les
of $
10,0
00
(Max
: 5 x
pay
)
1 to
5 x
pay
in
mul
tiple
s of
1 x
pa
y
1 to
5 x
pay
in
mul
tiple
s of
1 x
pay
Min
imum
Max
mim
um
$1,0
00,0
00
$1,0
00,0
00
Non
e --
Com
bine
d w
ith B
asic
Life
: $1
,600
,000
Com
bine
d w
ith
Bas
ic L
ife:
$1,5
00,0
00
Com
bine
d w
ith
Bas
ic L
ife:
$1,5
00,0
00D
epen
dent
Spo
use
Non
e --
Em
ploy
ee
Opt
ion:
$10
,000
to
$100
,000
in m
ultip
les
of $
10,0
00
Em
ploy
ee
optio
n, $
25,0
00
or $
50,0
00 o
r $1
00,0
00
Em
ploy
ee o
ptio
n,
$25,
000
or $
50,0
00
or $
100,
000
Opt
ion
I: $2
5,00
0 $2
5,00
0 O
ptio
n II:
$5
0,00
0 $5
0,00
0 O
ptio
n III
: O
ptio
n IV
:C
hild
ren:
Non
e --
Em
ploy
ee
optio
n, $
10,0
00 o
r $1
5,00
0 or
$30
,000
Em
ploy
ee
optio
n, $
5,00
0 or
$1
0,00
0
Em
ploy
ee o
ptio
n,
$5,0
00 o
r $1
0,00
0
Opt
ion
I: $2
,500
$2
,500
O
ptio
n II:
$4,0
00
$4,0
00
Opt
ion
III:
$10,
000
$10,
000
Opt
ion
VII:
Acc
iden
tal D
eath
-Act
ive
Par
ticip
atio
n R
equi
rem
ents
Non
eN
one
6 m
onth
s of
ser
vice
--
Non
eN
one
Non
e
Mon
thly
Em
ploy
ee C
ontr
ibut
ions
Non
eN
one
Non
eN
one
Non
eD
eath
Ben
efit
Am
ount
1 x
pay
+ $5
,000
; Max
: $2
5,00
01
x pa
y +
$5,0
00; M
ax: $
25,0
00N
o pl
an -
- 3
x p
ay,
Max
: $60
0,00
01
x pa
y, M
ax:
$378
,000
1 x
pay
Com
pari
tor
Gro
up
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 36 of 54
124
36©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Life
Ins
uran
ce/A
D&
D B
enef
its
The
key
fact
or d
rivin
g N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
life
in
sura
nce
and
AD
&D
pro
gram
s to
be
riche
r tha
n so
me
of th
eir c
ompe
titor
s (r
anke
d 3rd
and
6thre
spec
tivel
y) a
re th
eir h
igh
basi
c lif
e am
ount
s: 2
.5x
pay
for t
he N
ew Y
ork
Uni
on, a
nd 2
x pa
y fo
r the
New
Eng
land
Uni
on, a
s co
mpa
red
to th
e av
erag
e/m
ode
of 1
x pa
y fo
r the
com
petit
or g
roup
Onl
y G
, J, K
, and
L o
ffer b
asic
life
at 2
x pa
y, a
nd n
o ot
her c
ompa
ny o
ffers
this
be
nefit
at 2
.5x
pay
The
New
Yor
k U
nion
’s b
enef
it m
axim
um is
$62
5,00
0, w
hich
is g
reat
er th
an th
e co
mpe
titor
gro
up a
vera
ge o
f $44
1,00
0, th
ough
low
er th
an th
e co
mpe
titor
gro
up
mod
e of
$1,
000,
000
The
New
Yor
k U
nion
ben
efit
max
imum
is ri
cher
than
New
Eng
land
Uni
on’s
be
nefit
max
imum
of $
200,
000,
whi
ch is
why
the
New
Yor
k U
nion
is ra
nked
hig
her
than
the
New
Eng
land
Uni
on
Nat
iona
l Grid
’s U
nion
pla
ns c
ompa
re w
ell w
ith th
eir c
ompe
titor
s in
term
s of
su
pple
men
tal l
ife b
enef
its, a
nd o
ffer a
sep
arat
e be
nefit
max
imum
of $
1,00
0,00
0 fo
r th
ese
bene
fits,
whe
reas
the
maj
ority
of t
heir
com
petit
ors
offe
r a c
ombi
ned
basi
c an
d su
pple
men
tal b
enef
it m
axim
um o
f $1,
500,
000
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 37 of 54
125
37©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Life
Ins
uran
ce/A
D&
D B
enef
its
Bot
h N
atio
nal G
rid U
nion
s of
fer c
ompe
titiv
e de
pend
ent l
ife b
enef
its, a
lthou
gh th
e m
ajor
ity o
f com
petit
or c
ompa
nies
offe
r an
addi
tiona
l spo
use
bene
fit o
ptio
n of
$1
00,0
00, w
here
as th
e N
atio
nal G
rid U
nion
s on
ly o
ffer a
max
imum
$50
,000
ben
efit
optio
nB
oth
Nat
iona
l Grid
Uni
ons
offe
r thr
ee c
hild
life
opt
ions
: $2,
500,
$4,
000,
and
$1
0,00
0, w
here
as th
e m
ajor
ity o
f the
com
petit
or c
ompa
nies
onl
y of
fer a
$5,
000
and
$10,
000
optio
n
The
AD
&D
ben
efit
is w
here
bot
h N
atio
nal G
rid U
nion
s fa
ll sh
ort o
f the
com
petit
or
com
pani
es --
they
onl
y of
fer a
dea
th b
enef
it am
ount
of 1
x pa
y pl
us $
5,00
0 to
a m
axim
um o
f $25
,000
, ver
sus
a co
mpe
titor
gro
up a
vera
ge o
f 1x
pay
to a
max
imum
of
$37
8,00
0
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 38 of 54
126
38©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Life
Ins
uran
ce a
nd A
D&
D B
enef
it
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
New
Y
ork
and
New
Eng
land
U
nion
pla
ns c
ompa
re to
th
eir p
eers
bot
h in
term
s of
gro
ss b
enef
it va
lue
of
life
insu
ranc
e an
d AD
&D, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee c
ontri
butio
ns)
EJ
KG
CI
MN
AB
FD
LH
BJ
KC
GM
AI
NE
HF
LD
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 39 of 54
127
39©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Sho
rt T
erm
Dis
abili
ty S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
of S
TD p
rogr
ams
In te
rms
of b
oth
Em
ploy
er V
alue
and
Tot
al V
alue
, the
New
Yor
k U
nion
des
ign
is s
light
ly
abov
e av
erag
e, a
nd th
e N
ew E
ngla
nd U
nion
pla
n is
slig
htly
bel
ow a
vera
ge
1498
.6N
atio
nal G
rid N
ew E
ngla
nd U
nion
910
2.6
Nat
iona
l Grid
New
Yor
k U
nion
Tota
l Val
ue
1498
.6N
atio
nal G
rid N
ew E
ngla
nd U
nion
910
2.6
Nat
iona
l Grid
New
Yor
k U
nion
Empl
oyer
Val
ue
Ran
k/16
Sc
ore
Shor
t Ter
m D
isab
ility
Sco
re a
nd R
ank
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 40 of 54
128
40©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Sho
rt T
erm
Dis
abili
ty B
enef
it
The
New
Yor
k U
nion
’s s
ick
pay
bene
fit is
less
rich
than
thos
e of
the
com
petit
or
grou
p at
ear
lier y
ears
of s
ervi
ce: 1
wee
k ve
rsus
2 w
eeks
at 1
yea
r of s
ervi
ce, a
nd 5
w
eeks
ver
sus
6 w
eeks
at 5
yea
rs o
f ser
vice
. The
ben
efit
catc
hes
up to
the
com
petit
or g
roup
ave
rage
at l
ater
yea
rs, t
houg
h, a
nd s
urpa
sses
the
aver
age
at 2
5 w
eeks
and
bey
ond
The
sala
ry c
ontin
uanc
e be
nefit
is p
rovi
ded
at 6
0% o
f pay
for t
heba
lanc
e of
26
wee
ks a
s co
mbi
ned
with
the
sick
pay
ben
efit,
whi
ch is
less
gen
erou
s th
an m
ost
of th
e ot
her c
ompe
titor
com
pani
es: 8
0% to
100
% o
f pay
for a
rang
e of
wee
ks a
t ye
ars
of s
ervi
ce b
ands
The
New
Eng
land
Uni
on’s
sic
k pa
y be
nefit
is th
e sa
me
as th
e N
ew Y
ork
Uni
on’s
si
ck p
ay b
enef
it, b
ut th
e sa
lary
con
tinua
nce
bene
fit is
pro
vide
dat
60%
of p
ay fo
r th
e ba
lanc
e of
13
wee
ks a
s co
mbi
ned
with
the
sick
pay
ben
efit,
whi
ch is
less
ge
nero
us th
an m
ost o
f the
oth
er c
ompe
titor
com
pani
es: 8
0% to
100
% o
f pay
for a
ra
nge
of w
eeks
at y
ears
of s
ervi
ce b
ands
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 41 of 54
129
41©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Sho
rt T
erm
Dis
abili
ty C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Sho
rt T
erm
Dis
abili
ty
Nat
iona
l Grid
New
Yor
k Un
ion
Nat
iona
l Gri
d Ne
w
Engl
and
Unio
n Ra
nge
Ave
rage
Mod
eS
ick
Pay
1st D
ay o
f Dis
abili
ty1s
t Day
of D
isab
ility
If ill
ness
, 7th
cal
enda
r day
of
dis
abili
ty; i
f acc
iden
t, 1s
t day
of d
isab
ility
-- 1
st
day
of d
isab
ility
N/A
1st d
ay o
f dis
abili
ty
Sal
ary
Con
tinua
nce
End
of S
ick
Pay
End
of S
ick
Pay
Late
r of 6
th w
orki
ng d
ay o
f di
sabi
lity
or e
nd o
f Sic
k P
ay --
End
of S
ick
Pay
N/A
End
of S
ick
Pay
Ben
efit
Amou
ntS
ick
Pay
Yea
rs o
f Ser
vice
Wee
ks a
t 100
%
Wee
ks a
t 100
%
11
12-
42
25
55
2-10
66
1010
102-
209
1515
1515
2-30
1216
2020
202-
4014
2325
2525
2-50
1726
3030
302-
6021
3035
3535
2-60
2532
Sal
ary
Con
tinua
nce
60%
of p
ay; L
ess
Prim
ary
Soc
ial S
ecur
ity; L
ess
Dep
ende
nt S
ocia
l Sec
urity
; P
ayab
le fo
r bal
ance
of 2
6 w
eeks
per
yea
r
60%
of p
ay; L
ess
Prim
ary
Soc
ial S
ecur
ity; L
ess
Dep
ende
nt S
ocia
l Sec
urity
; P
ayab
le fo
r bal
ance
of 1
3 w
eeks
per
yea
r
No
sala
ry c
ontin
uanc
e --
100%
of p
ay, l
ess
prim
ary
soci
al s
ecur
ity, p
ayab
le fo
r 52
wee
ks p
er d
isab
ility
N/A
YO
S S
ched
ule
(sal
ary
cont
inua
nce
varie
s fro
m fo
r pe
rcen
tage
of p
ay)
Yea
rs o
f Ser
vice
Wee
ks a
t 60%
Wee
ks a
t 60%
125
125
218
1016
315
110
206
025
10
300
035
00
Com
pari
tor G
roup
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 42 of 54
130
42©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Sho
rt T
erm
Dis
abili
ty
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
ans
com
pare
to th
eir
peer
s bo
th in
term
s of
gr
oss
bene
fit v
alue
of
STD
pla
ns, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee
cont
ribut
ions
)
LM
BK
HG
CI
EA
DN
JF
LM
BK
HG
CI
EA
DN
JF
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 43 of 54
131
43©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Long
Ter
m D
isab
ility
Ben
efit
Sco
re a
nd R
ank
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
s’co
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
ofLT
D p
rogr
ams
Long
Ter
m D
isab
ility
Sco
re a
nd R
ank
Scor
eR
ank/
16Em
ploy
er V
alue
Nat
iona
l Grid
New
Yor
k U
nion
0.0
tied
for l
ast w
/ 4 o
ther
co
mpa
nies
Nat
iona
l Grid
New
Eng
land
Uni
on20
.211
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
0.0
tied
for l
ast w
/ 3 o
ther
co
mpa
nies
Nat
iona
l Grid
New
Eng
land
Uni
on18
6.5
2
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 44 of 54
132
44©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Long
Ter
m D
isab
ility
Ben
efit
The
New
Yor
k U
nion
doe
s no
t offe
r the
ir em
ploy
ees
an L
TD p
lan,
so
they
are
tie
d fo
r las
t pla
ce u
nder
the
Tota
l Val
ue w
ith th
ree
othe
r com
petit
or c
ompa
nies
(D
, F, a
nd H
) tha
t als
o do
not
offe
r LTD
pla
ns
In te
rms
of T
otal
Val
ue, t
he N
ew E
ngla
nd U
nion
LTD
pla
n is
ver
y co
mpe
titiv
e du
e to
the
fact
that
ben
efits
com
men
ce m
uch
mor
e qu
ickl
y -3
.25
mon
ths
inst
ead
of th
e av
erag
e of
6 m
onth
s fo
r the
com
petit
or g
roup
Add
ition
ally
, men
tal h
ealth
/che
mic
al d
epen
denc
y be
nefit
s un
der t
he L
TD
plan
con
tinue
to a
ge 6
5, w
here
as th
e av
erag
e du
ratio
n fo
r the
se b
enef
its fo
r th
e co
mpe
titor
gro
up is
onl
y 24
mon
ths
The
New
Eng
land
Uni
on b
ecom
es m
uch
less
com
petit
ive
rela
tive
to th
eir
com
petit
ors,
how
ever
, in
term
s of
Em
ploy
er V
alue
, due
to h
igh
empl
oyee
co
ntrib
utio
ns re
quire
d fo
r the
pla
n O
nly
thre
e ot
her c
ompa
nies
requ
ire e
mpl
oyee
con
tribu
tions
for t
heir
basi
c LT
D p
lan:
C, A
, and
ETh
e N
ew E
ngla
nd U
nion
pla
n is
the
only
pla
n th
at re
quire
s a
fixed
co
ntrib
utio
n re
gard
less
of b
enef
it le
vel (
i.e.,
if co
ntrib
utio
nsar
e re
quire
d,
empl
oyee
s ar
e ch
arge
d a
perc
ent o
f cov
ered
pay
)
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 45 of 54
133
45©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Long
Ter
m D
isab
ility
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Long
Ter
m D
isab
ility
Nat
iona
l Grid
New
Yor
k Un
ion\
N
atio
nal G
rid
New
En
glan
d Un
ion
Ran
geAv
erag
eM
ode
Com
men
cem
ent
Late
r of 1
3 w
eeks
of d
isab
ility
or
exh
aust
ion
of s
hort-
term
di
sabi
lity
bene
fits
No
LTD
Pla
n --
Afte
r ex
haus
tion
of S
TD b
enef
itsA
fter 6
mon
ths
of d
isab
ility
Afte
r 6 m
onth
s of
dis
abili
ty
Dura
tion
Men
tal H
ealth
/Che
mic
al D
epen
denc
yTo
age
65
No
LTD
Pla
n --
to a
ge 6
5Fo
r 24
mon
ths
For 2
4 m
onth
sAm
ount
60%
of p
ay, L
ess
Prim
ary
Soc
ial S
ecur
ity, L
ess
Dep
ende
nt S
ocia
l Sec
urity
Max
imum
Fro
m a
ll S
ourc
esN
o LT
D P
lan
-- $3
0,00
0/m
onth
$977
1/m
onth
$10,
000/
mon
th
Com
pany
doe
s no
t pro
vide
an
LTD
pla
n. D
isab
led
empl
oyee
s w
ho m
eet
elig
ibili
ty re
quire
men
ts re
ceive
be
nefit
s fro
m: C
ompa
ny p
aid
disa
bilit
y re
tirem
ent,
Gro
up
Life
Insu
ranc
e, P
ensi
on P
lan
Com
parit
or G
roup
No
LTD
Pla
n --
60%
of P
ay,
Less
Prim
ary
Soc
ial S
ecur
ity56
% o
f pay
, Les
s S
ocia
l Sec
urity
, Les
s P
ensi
on B
enef
its60
% o
f pay
, Le
ss P
rimar
y S
ocia
l Sec
urity
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 46 of 54
134
46©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Long
Ter
m D
isab
ility
Ben
efit
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
ans
com
pare
to th
eir
peer
s bo
th in
term
s of
gr
oss
bene
fit v
alue
of
LTD
pla
ns, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee
cont
ribut
ions
)
FA
KJ
GC
MI
BN
DE
LH
FL
CK
JE
GM
NI
BD
AH
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 47 of 54
135
47©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Vac
atio
n an
d H
olid
ay B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pla
ns
com
petit
ive
posi
tioni
ng re
lativ
e to
thei
r pee
r gro
up in
term
s of
vaca
tion
and
holid
ay p
rogr
ams
Vac
atio
n an
d H
olid
ay S
core
and
Ran
k
Sco
reR
ank/
16Em
ploy
er V
alue
Nat
iona
l Grid
New
Yor
k U
nion
103.
1
tied
for 4
th w
/ 2
othe
r co
mpa
nies
Nat
iona
l Grid
New
Eng
land
Uni
on10
0.1
11
Tota
l Val
ue
Nat
iona
l Grid
New
Yor
k U
nion
103.
1
tied
for 4
th w
/ 2
othe
r co
mpa
nies
Nat
iona
l Grid
New
Eng
land
Uni
on10
0.1
11
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 48 of 54
136
48©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Vac
atio
n an
d H
olid
ay B
enef
it
A m
ajor
ity o
f the
com
petit
or c
ompa
nies
offe
r ver
y si
mila
r vac
atio
n an
d ho
liday
ben
efits
, so
the
rang
e of
sco
res
are
clos
e fo
r all
but a
few
of t
he c
ompa
nies
The
New
Yor
k U
nion
ove
rall
desi
gn is
slig
htly
mor
e ge
nero
us th
anso
me
of th
e ot
her
com
petit
or c
ompa
nies
—W
hile
the
New
Yor
k U
nion
vac
atio
n be
nefit
is le
ss ri
ch th
an th
ose
of th
e co
mpe
titor
gr
oup
at e
arlie
r yea
rs o
f ser
vice
(0 w
eeks
ver
sus
an a
vera
ge o
f 2.5
(mod
e is
0) a
t le
ss th
an 1
yea
r of s
ervi
ce, u
p to
10
wee
ks v
ersu
s an
ave
rage
of8
.6 (m
ode
is 1
0) a
t 1
year
of s
ervi
ce, a
nd 1
0 w
eeks
ver
sus
an a
vera
ge o
f 13.
4 w
eeks
(mod
e is
15)
at 5
ye
ars
of s
ervi
ce),
the
bene
fit c
atch
es u
p to
the
com
petit
or a
vera
ge a
t lat
er y
ears
, and
su
rpas
ses
the
com
petit
or g
roup
mod
e at
30
year
s of
ser
vice
—Th
e N
ew Y
ork
Uni
on a
lso
offe
rs 1
3 ho
liday
s, w
hich
is in
line
with
wha
t the
oth
er
high
ly ra
nked
com
petit
or c
ompa
nies
offe
rTh
e N
ew E
ngla
nd U
nion
vac
atio
n an
d ho
liday
ben
efit
scor
ed a
littl
e lo
wer
than
the
New
Y
ork
Uni
on b
enef
it, p
rimar
ily b
ecau
se th
ey o
ffer 1
less
hol
iday
than
the
New
Yor
k U
nion
—W
hile
the
New
Eng
land
Uni
on v
acat
ion
bene
fit a
t les
s th
an 1
yea
rof s
ervi
ce is
a li
ttle
mor
e ge
nero
us (u
p to
5 d
ays
vers
us 0
day
s) th
an th
e N
ew Y
ork
Uni
on b
enef
it fo
r thi
s se
rvic
e ba
nd, a
fter 2
2 ye
ars
of s
ervi
ce a
nd g
reat
er, t
he N
ew E
ngla
nd U
nion
vac
atio
n be
nefit
tops
out
at 2
5 da
ys, w
here
as th
e N
ew Y
ork
Uni
on v
acat
ion
bene
fit in
crea
ses
to 3
0 da
ys a
fter 3
0 or
mor
e ye
ars
of s
ervi
ce
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 49 of 54
137
49©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Vac
atio
n an
d H
olid
ay B
enef
its
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
New
Yor
k an
d N
ew E
ngla
nd U
nion
pl
an d
esig
ns re
lativ
e to
thei
r pee
r gro
up p
lan
desi
gns
Vac
atio
n an
d H
olid
ay P
ract
ices
Nat
iona
l Gri
d Ne
w
York
Uni
on
Nat
iona
l Gri
d N
ew
Engl
and
Uni
on
Ran
geAv
erag
e M
ode
Am
ount
of V
acat
ion
(day
s)Y
ears
of S
ervic
e<1
0U
p to
50
- Up
to 1
02.
50
1U
p to
10
105-
108.
610
510
1010
-15
13.4
1510
1515
15-2
015
.815
1520
2020
-21
20.1
2020
2020
20-2
521
.920
2525
2520
-25
24.6
2530
3025
20-3
026
.825
Hol
iday
Pol
icy
Com
pany
Sch
edul
ed11
day
s11
day
s7-
1210
.311
Em
ploy
ee S
ched
uled
2 da
ys1
day
0-6
2.1
2
Com
pari
tor
Gro
up
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 50 of 54
138
50©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Vac
atio
n an
d H
olid
ay S
core
and
Ran
k
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
N
atio
nal G
rid’s
New
Y
ork
and
New
Eng
land
U
nion
pla
ns c
ompa
re
to th
eir p
eers
bot
h in
te
rms
of g
ross
ben
efit
valu
e of
vac
atio
n an
d ho
liday
pla
ns, a
s w
ell
as e
mpl
oyer
-pro
vide
d va
lue
(i.e.
, net
of
empl
oyee
co
ntrib
utio
ns)
LB
KG
IE
DJ
MC
HA
NF
LB
KG
IE
DJ
MC
HA
NF
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 51 of 54
139
Sum
mar
y
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 52 of 54
140
52©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
Sum
mar
y
As
note
d th
roug
hout
this
doc
umen
t, ea
ch N
atio
nal G
rid U
nion
has
som
e be
nefit
pro
visi
ons
that
are
mor
e ge
nero
us th
an th
e co
mpe
titor
gro
up, a
nd o
ther
s th
at a
re le
ss g
ener
ous
than
the
com
petit
or g
roup
, whi
ch
ultim
atel
y co
ntrib
ute
to th
e ov
eral
l Ent
ire B
enef
it P
rogr
am s
core
In te
rms
of E
mpl
oyer
Val
ue, t
he N
ew Y
ork
Uni
on o
ffers
gen
erou
s ac
tive
and
retir
ee m
edic
al p
rogr
ams,
le
ss ri
ch re
tirem
ent b
enef
its, a
nd c
ompe
titiv
e va
catio
n/ho
liday
ben
efits
. The
ir E
ntire
Ben
efit
Pro
gram
sc
ore
is b
ette
r tha
n th
e av
erag
e be
caus
e m
edic
al b
enef
its c
ompr
ise
the
larg
est c
ompo
nent
of a
ben
efit
prog
ram
Con
vers
ely,
in te
rms
of E
mpl
oyer
Val
ue, t
he N
ew E
ngla
nd U
nion
offe
rs le
ss th
an a
vera
ge a
ctiv
e an
d re
tiree
med
ical
ben
efits
, gen
erou
s re
tirem
ent b
enef
its, a
nd a
vera
ge v
acat
ion/
holid
ay b
enef
its. A
gain
, si
nce
med
ical
ben
efits
com
pris
e th
e la
rges
t com
pone
nt o
f a b
enef
it pr
ogra
m, t
heir
Ent
ire B
enef
it pr
ogra
m
scor
e is
less
than
the
aver
age
Prov
isio
nEm
ploy
er V
alue
Tota
l Val
ueEm
ploy
er V
alue
Tota
l Val
ue
Entir
e Be
nefit
Pro
gram
107.
910
1.7
96.6
98.5
Def
ined
Ben
efit
78.0
78.0
117.
911
7.9
Def
ined
Con
tribu
tion
65.1
73.2
106.
694
.9
Def
ined
Ben
efit
+ D
efin
ed c
ontri
butio
n73
.174
.911
3.6
102.
9
Pos
t-ret
irem
ent M
edic
al26
8.6
176.
637
.860
.9
Pos
t-ret
irem
ent D
eath
0.0
0.0
43.3
38.7
Ret
irem
ent E
vent
s12
3.2
99.5
93.3
92.1
Act
ive M
edic
al10
4.0
104.
296
.910
2.1
Den
tal
102.
410
3.7
79.0
85.2
Life
Insu
ranc
e/A
D&
D16
4.4
134.
914
0.7
119.
3
STD
102.
610
2.6
98.6
98.6
LTD
0.0
0.0
20.2
186.
5
Vac
atio
n +
Hol
iday
103.
110
3.1
100.
110
0.1
Nat
iona
l Gri
d N
ew Y
ork
Unio
n Na
tiona
l Gri
d Ne
w E
ngla
nd
Unio
n
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 53 of 54
141
53©
2008
Tow
ers
Perr
inP
ropr
ieta
ry a
nd C
onfid
entia
lN
ot fo
r use
or d
iscl
osur
e ou
tsid
e To
wer
s P
errin
and
its
clie
nts
BE
NV
AL®
Met
hodo
logy
Rel
ativ
e va
lues
are
not
inte
nded
to re
pres
ent a
ctua
l pla
n/pr
ogra
m c
osts
Pla
n pr
ovis
ions
val
ued
are
thos
e th
at a
pply
to n
ewly
hire
d em
ploy
ees
Ben
efits
no
long
er a
vaila
ble
to n
ew h
ires
are
not c
onsi
dere
d
Ben
efit
valu
es a
re b
ased
on
the
follo
win
g as
sum
ptio
ns a
nd m
etho
dolo
gies
Sta
ndar
d po
pula
tion
—Av
erag
e ag
e: 4
2 ye
ars
—Av
erag
e se
rvic
e: 1
1.5
year
s—
Aver
age
base
sal
ary:
$60
,000
—Av
erag
e to
tal s
alar
y: $
64,5
00K
ey e
cono
mic
ass
umpt
ions
—D
isco
unt r
ate:
7.5
%—
Sal
ary
incr
ease
rate
: 4.5
%
—In
flatio
n: 2
.5%
—O
ne-y
ear T
reas
ury
bond
yie
ld: 4
.4%
—30
-yea
r Tre
asur
y bo
nd y
ield
: 5.5
%—
Hea
lth c
are
cost
tren
d: 1
0% g
rade
d to
5%
ove
r 5 y
ears
Not
e: a
mor
e de
taile
d su
mm
ary
of a
ssum
ptio
ns a
nd p
lan-
spec
ific
met
hodo
logy
can
be
foun
d in
the
“Hel
p”se
ctio
n in
the
BEN
VAL®
softw
are
tool
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-9 Page 54 of 54
142
Schedule
N
G-W
FD-10
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Dowd
Schedule NG-WFD-10
BENVAL Analysis for Non-Union Benefits (Towers Perrin, 9/7/06)
143
Aug
ust 2
5, 2
006
©20
06 T
ower
s Pe
rrin
BEN
VAL
Ana
lysi
s fo
r Non
-Uni
on B
enef
its
Nat
iona
l Gri
d
Con
fiden
tial -
For
Dis
cuss
ion
Pur
pose
s O
nly.
This
doc
umen
t is
inte
nded
for
disc
ussi
on p
urpo
ses
only
. It
shou
ld n
ot b
e di
stri
bute
d to
any
thi
rd p
arty
, or
publ
ishe
d in
w
hole
or
in p
art
in a
ny fo
rm, w
ithou
t pr
ior
wri
tten
con
sent
of
Tow
ers
Per
rin.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 1 of 36
144
©20
06 T
ower
s Pe
rrin
1
Tab
le o
f C
onte
nts
Ove
rvie
w o
f Com
petit
ive
Ass
essm
ent
Ent
ire B
enef
it P
rogr
am
Ret
irem
ent B
enef
its
Act
ive
Ben
efits
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 2 of 36
145
©20
06 T
ower
s Pe
rrin
2
Ove
rvie
w o
f C
ompe
titi
ve A
sses
smen
t
Tow
ers
Per
rin c
ondu
cted
a h
ealth
car
e co
mpe
titiv
e as
sess
men
t com
parin
g no
n-un
ion
bene
fit le
vels
for b
oth
Nat
iona
l Grid
and
Key
span
rela
tive
to th
e 19
pee
r or
gani
zatio
ns; t
his
anal
ysis
was
bas
ed o
n 20
06 b
enef
it pr
ogra
ms
for N
atio
nal G
rid,
Key
span
and
all c
ompa
rato
r com
pani
es
The
anal
ysis
was
bas
ed o
n in
divi
dual
em
ploy
er p
lan
prov
isio
n ap
plie
d to
a s
tand
ard
popu
latio
n re
flect
ive
of N
atio
nal G
rid’s
and
Key
span
’sde
mog
raph
ics
usin
g co
nsis
tent
ec
onom
ic a
nd u
tiliz
atio
n as
sum
ptio
ns, t
here
by m
easu
ring
the
“fina
ncia
l val
ue”o
f the
pl
an, n
ot th
e ac
tual
cos
t of t
he p
lan
The
“fina
ncia
l val
ue”o
f eac
h pl
an re
pres
ents
the
perc
enta
ge o
f an
aver
age
mem
ber’s
cov
ered
med
ical
exp
ense
s th
at th
e pl
an re
imbu
rses
adj
uste
d fo
rfin
anci
al
perfo
rman
ce a
nd e
ffici
ency
of t
he p
lan
Eac
h co
mpa
ny’s
“fin
anci
al v
alue
”is
then
com
pare
d to
the
aver
age
“fina
ncia
l val
ue”
of a
ll co
mpe
titor
com
pani
es to
det
erm
ine
“rela
tive
valu
e”
The
aver
age
of a
ll co
mpa
nies
is s
et to
1.0
0 fo
r eac
h be
nefit
suc
h th
at a
n em
ploy
er
scor
e fa
lling
abov
e or
bel
ow 1
.00
indi
cate
s ho
w g
ener
ous
the
empl
oyer
’s b
enef
its a
re
rela
tive
to th
e av
erag
e
Thro
ugho
ut th
is d
ocum
ent,
“Tot
al V
alue
”ref
ers
to th
e po
sitio
ning
of t
he b
enef
it pr
ogra
ms
prio
r to
empl
oyee
con
tribu
tions
, whe
reas
“Em
ploy
er V
alue
”ref
ers
to th
e va
lue
afte
r em
ploy
ee c
ontri
butio
ns h
ave
been
ded
ucte
d
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 3 of 36
146
Ent
ire
Ben
efit
Pro
gram
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 4 of 36
147
©20
06 T
ower
s Pe
rrin
4
Ent
ire
Ben
efit
Pro
gram
Entir
e B
enef
it Pr
ogra
m S
core
and
Ran
k
Scor
eRa
nk/2
1Em
ploy
er V
alue
Nat
iona
l Grid
98.8
13
Key
span
87.5
17
Tota
l Val
ue
Nat
iona
l Grid
96.2
15
Key
span
104.
88
Nat
iona
l Grid
's to
tal p
lans
are
low
er th
an th
e av
erag
e w
hen
com
pare
d to
the
peer
gro
up.
One
key
driv
er is
the
Sto
ck P
urch
ase
Pla
n of
fere
d by
Key
span
. With
out t
his
plan
, bot
h N
atio
nal G
rid a
nd K
eysp
an fa
ll in
the
third
qua
rtile
for o
vera
llpl
an d
esig
n, w
ith K
eysp
an
slig
htly
hig
her b
efor
e re
cogn
izin
g co
st s
harin
g w
ith e
mpl
oyee
s.
Key
span
’sTo
tal V
alue
of 1
04.8
indi
cate
s th
at th
e pa
ckag
e of
ben
efits
is m
ore
gene
rous
th
an th
e av
erag
e, h
owev
er th
e E
mpl
oyer
Val
ue d
ecre
asin
g to
87.
5 in
dica
tes
that
em
ploy
ees
are
requ
ired
to c
ontri
bute
mor
e he
avily
than
the
com
para
tor g
roup
.
Con
vers
ely,
Nat
iona
l Grid
’s c
ompe
titiv
e po
sitio
ning
impr
oves
whe
n m
ovin
g fro
m T
otal
Val
ue
to E
mpl
oyer
Val
ue, i
ndic
atin
g th
at w
hile
the
over
all v
alue
is b
elow
the
aver
age,
Nat
iona
l G
rid re
quire
s em
ploy
ees
to c
ontri
bute
less
than
the
aver
age.
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 5 of 36
148
©20
06 T
ower
s Pe
rrin
5
Ent
ire
Ben
efit
Pro
gram
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
’s a
nd K
eysp
an
com
pare
to th
eir p
eers
bot
h in
term
s of
gro
ss b
enef
it va
lue
of th
eir e
ntire
be
nefit
pro
gram
, as
wel
l as
empl
oyer
-pro
vide
d va
lue
(i.e.
, net
of e
mpl
oyee
co
ntrib
utio
ns)
IP
GL
DA
JK
FH
BS
EN
RQ
OM
C
IE
PK
OD
AR
JS
HB
GN
QF
ML
C
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 6 of 36
149
Ret
irem
ent
Ben
efit
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 7 of 36
150
©20
06 T
ower
s Pe
rrin
7
All
Ret
irem
ent
Pla
ns e
xcep
t S
tock
Pur
chas
e P
lan
This
cha
rt re
flect
s to
tal p
lan
desi
gn v
alue
s fo
r ret
irem
ent e
vent
s re
flect
ing
all p
lans
exc
ept t
he s
tock
pu
rcha
se p
lans
Rel
ativ
e ra
nkin
gs fo
r pla
n de
sign
do
not c
hang
e w
hen
the
Sto
ck P
urch
ase
Pla
n is
add
ed in
Val
ues
have
a re
lativ
ely
wid
e di
sper
sion
, with
val
ues
rang
ing
from
50.
8 to
133
.0
Con
side
ring
Em
ploy
er-V
alue
s, K
eysp
an’s
rank
ing
chan
ges
to th
e fo
urth
qua
rtile
(fro
m th
e se
cond
qu
artil
e) fo
r ret
irem
ent-e
vent
s; k
ey d
river
her
e is
the
cost
-sha
ring
arra
ngem
ent f
or re
tiree
med
ical
IE
RG
LO
KQ
HB
SN
PC
MJ
DF
A
NE
OR
LM
JD
SH
IB
PC
KQ
FG
A
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 8 of 36
151
©20
06 T
ower
s Pe
rrin
8
All
Ret
irem
ent
Eve
nts
exce
pt R
etir
emen
t an
d D
eath
Rel
ativ
e ra
nkin
gs fo
r pla
n de
sign
do
not c
hang
e w
hen
the
Sto
ck P
urch
ase
Pla
n is
add
ed in
The
rang
e of
resu
lts is
muc
h na
rrow
er w
ith v
alue
s ra
ngin
g fro
m 9
4.6
to 1
07.8
CL
QO
AJ
MB
RI
SF
EN
HK
DP
G
CE
GP
BM
QI
HR
SF
LN
JK
AO
D
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 9 of 36
152
©20
06 T
ower
s Pe
rrin
9
Tot
al r
etir
emen
t be
nefi
ts, e
xclu
ding
med
ical
K
eysp
anan
d N
atio
nal G
rid p
rogr
ams
have
ver
y co
nsis
tent
ben
efit
valu
es w
ith re
spec
t to
empl
oyer
-val
ues
Con
side
ring
plan
des
ign
(i.e.
, with
em
ploy
ee c
ontri
butio
ns a
dded
), th
e K
eysp
anpr
ogra
m im
prov
es
to a
bove
the
med
ian,
whi
le th
e N
atio
nal G
rid p
rogr
am re
mai
ns n
ear t
he b
otto
m
This
diff
eren
tial i
s pr
imar
ily re
late
d to
the
valu
e of
Key
span
’sS
tock
Pur
chas
e P
lan
With
out t
he S
tock
Pur
chas
e P
lan,
Key
span
’sre
tirem
ent p
lan
desi
gn fa
lls to
a ra
nk ju
st b
elow
that
fo
r Nat
iona
l Grid
NG
EM
FP
AH
BJ
SD
RI
LK
OQ
C
NM
RK
EF
OA
HB
JS
GI
QP
DL
C
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 10 of 36
153
©20
06 T
ower
s Pe
rrin
10
Pos
t re
tire
men
t m
edic
al b
enef
its
A k
ey fa
ctor
in K
eysp
an’s
rank
ing
is th
e re
lativ
ely
low
elig
ibili
ty th
resh
old
for t
he b
enef
it (5
ye
ars
of s
ervi
ce a
t age
55)
How
ever
, em
ploy
er c
osts
for e
ligib
le e
mpl
oyee
s ar
e ca
pped
at t
hecu
rrent
leve
l and
do
not
appe
ar to
be
as h
eavi
ly s
ubsi
dize
d (fo
r the
retir
ee a
nd c
over
ed d
epen
dent
s) a
s in
Nat
iona
l G
rid’s
pro
gram
Whe
n em
ploy
ee c
ontri
butio
ns a
re in
clud
ed, K
eysp
an’s
prog
ram
rank
s 3r
d fro
m th
e to
p,
whi
le N
atio
nal G
rid’s
is b
elow
the
med
ian,
with
Key
span
’spr
ogra
m m
ore
than
twic
e as
va
luab
le a
s N
atio
nal G
rid’s
pro
gram
IE
DA
JG
QR
OB
CH
PN
LM
FK
S
CO
QE
KD
LR
FI
SB
PH
AJ
GM
N
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 11 of 36
154
Act
ive
Ben
efit
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 12 of 36
155
©20
06 T
ower
s Pe
rrin
12
Act
ive
Med
ical
Pla
n D
eliv
ery
Mod
els
All
com
pani
es, e
xcep
t C, I
, and
R, o
ffer t
he e
mpl
oyee
s a
choi
ce o
f pla
n ty
pe
Mos
t com
pani
es th
at o
ffer p
lans
with
in-n
etw
ork
or o
ut-o
f-net
wor
k fe
atur
es o
ffer a
P
PO
rath
er th
an a
PO
STe
n co
mpa
nies
hav
e th
e P
PO
as
thei
r hig
hest
enr
olle
d pl
an
—Fo
ur c
ompa
nies
hav
e th
e P
OS
as
thei
r hig
hest
enr
olle
d pl
an a
nd tw
o co
mpa
nies
hav
e an
HM
O a
s th
e hi
ghes
t enr
olle
d pl
an—
One
com
pany
eac
h ha
s th
e Tr
iple
Opt
ion,
Com
preh
ensi
ve, a
nd B
asic
/Maj
or
med
ical
pla
n as
thei
r hig
hest
enr
olle
d pl
an, r
espe
ctiv
ely
Thre
e co
mpa
nies
offe
r bot
h a
PP
O a
nd P
OS
(H, N
, and
Q)
A is
the
only
com
pany
to o
ffer t
heir
empl
oyee
s a
cons
umer
driv
enhe
alth
pla
n
For p
urpo
ses
of th
e B
enV
al, w
e ev
alua
ted
only
the
optio
n w
ith h
ighe
st e
nrol
lmen
t
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 13 of 36
156
©20
06 T
ower
s Pe
rrin
13
Act
ive
Med
ical
Ben
efit
Sco
re a
nd R
ank
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to
thei
r pee
r gro
up in
term
s of
act
ive
med
ical
pro
gram
sIn
term
s of
Tot
al V
alue
, Nat
iona
l Grid
’s o
vera
ll de
sign
s ar
e m
ore
gene
rous
than
the
aver
age,
whe
reas
Key
span
’sde
sign
s ar
e be
low
the
aver
age
Bec
ause
Nat
iona
l Grid
’s c
ontri
butio
ns a
re m
ore
gene
rous
than
the
aver
age,
whe
reas
K
eysp
an’s
are
less
gen
erou
s (e
.g.,
Nat
iona
l Grid
’s E
mpl
oyee
Onl
y co
ntrib
utio
ns a
re
appr
oxim
atel
y $6
4 co
mpa
red
to K
eysp
an’s
of $
95, a
nd th
e av
erag
e co
mpe
titor
com
pany
’s o
f $7
3), N
atio
nal G
rid’s
ove
rall
Em
ploy
er V
alue
com
petit
ive
posi
tioni
ng w
orse
ns
Activ
e M
edic
al S
core
and
Ran
k
Scor
eRa
nk/2
1Em
ploy
er V
alue
Nat
iona
l Grid
104.
19
Key
span
88.6
19
Tota
l Val
ue
Nat
iona
l Grid
105.
27
Key
span
96.9
13
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 14 of 36
157
©20
06 T
ower
s Pe
rrin
14
Act
ive
Med
ical
Ben
efit
s C
ompa
riso
n
Ke
y P
lan
De
sig
n F
ea
ture
s -
Me
dic
al N
ati
on
al
Gri
dK
eys
pa
nR
an
ge
Ave
rag
eIn
-ne
two
rk
Ded
uctib
leN
one
Per
per
son:
$25
0 F
amily
max
: $5
00$0
-$40
0 (in
d) $
0-$1
200
(fam
)$1
20 (
ind)
$3
00 (
fam
)
Coi
nsur
ance
100%
90%
80%
-100
%90
%
Out
-of-p
ocke
t m
axim
umN
one
Per
per
son:
$1,
000
Fam
ily m
ax:
$2,0
00
(exc
lude
s de
duct
ible
)$0
-$22
50 (
ind)
$0-
$600
0 (fa
m)
$123
0 (in
d)
$276
0 (fa
m)
Inpa
tient
hos
pita
l10
0%90
%85
%,
$150
cop
ay-1
00%
90%
,$15
0 co
pay
Em
erge
ncy
room
100%
90%
$0 c
opay
-85%
,$50
cop
ay$5
0O
ffice
vis
its$1
0$1
5$5
-$25
$20
Pre
scrip
tion
drug
s (R
etai
l)
Gen
eric
$10
$10
$5-$
100
$10
Bra
nd$1
0/$3
0$2
0/$3
5$5
- 50
% fo
rmul
ary
and
40%
no
nfor
mul
ary
80%
(min
20-
max
50)
form
ular
y an
d 80
% (
min
30-
max
100
) no
nfor
mul
ary
Out
patie
nt m
enta
l hea
lth$5
, 24
vis
its50
%,
30 v
isits
per
yea
r$1
0-$3
0$2
0
Ou
t-o
f-n
etw
ork
Ded
uctib
le$2
00P
er p
erso
n $4
00 F
amily
Max
: $8
00$0
-$10
00 (
ind)
$0-
$300
0 (fa
m)
$470
(in
d)
$126
0 (fa
m)
Coi
nsur
ance
70%
70%
60%
-80%
70%
Out
-of-p
ocke
t m
axim
um$1
,300
Per
per
son
$2,4
00 F
amily
Max
: $4
,800
(e
xclu
des
dedu
ctib
le)
$170
0-$5
000
(ind)
$
3400
-$1
3200
(fa
m)
$339
0 (in
d)
$815
0 (fa
m)
Mo
nth
ly E
mp
loye
e C
on
trib
uti
on
s
Em
ploy
ee o
nly
$64.
10$9
5.00
$15.
57-$
359.
67$7
3.04
Fam
ily$1
82.7
0$2
50.0
0$7
5.67
-936
.50
$227
.94
Co
mp
ara
tor
Gro
up
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 15 of 36
158
©20
06 T
ower
s Pe
rrin
15
Act
ive
Med
ical
Ben
efit
s
The
aver
age
or m
edia
n fo
r mos
t of t
he b
enef
it fe
atur
es a
cros
s th
e co
mpe
titor
com
pani
es fa
ll so
mew
here
bet
wee
n N
atio
nal G
rid’s
and
Key
span
’sbe
nefit
feat
ures
The
key
fact
or d
rivin
g N
atio
nal G
rid’s
med
ical
pro
gram
s to
be
mor
e ric
h th
an th
eir
com
petit
ors
is th
e fa
ct th
at m
ost i
n-ne
twor
k se
rvic
es a
re c
over
ed a
t 100
% v
ersu
s an
ave
rage
of
90%
for t
heir
peer
s K
eysp
an’s
med
ical
pla
ns a
re c
onsi
dere
d le
ss c
ompe
titiv
e pr
imar
ily b
ecau
se e
mpl
oyee
co
ntrib
utio
ns a
re h
igh,
and
som
e be
nefit
feat
ures
, suc
h as
in-n
etw
ork
dedu
ctib
les,
are
hig
h w
hen
com
pare
d to
thei
r pee
r gro
up
If N
atio
nal G
rid is
inte
rest
ed in
bet
ter a
ligni
ng th
eir p
rogr
ams
with
thei
r com
petit
ors,
Nat
iona
l G
rid c
ould
con
side
r int
rodu
cing
an
in-n
etw
ork
dedu
ctib
le, r
aisi
ng o
ffice
vis
it co
pays
by
$5-$
10,
and
low
erin
g co
insu
ranc
e to
90%
from
100
%
All
of th
ese
mea
sure
s w
ill be
con
side
red
take
-aw
ays
by e
mpl
oyee
s, b
ut in
trodu
cing
one
or
two
of th
ese
cost
sha
ring
feat
ures
, ins
tead
of a
ll th
ree,
may
redu
ce e
mpl
oyee
reac
tion
Oth
er o
bser
vatio
ns:
Nat
iona
l Grid
’s o
utpa
tient
men
tal h
ealth
cop
ay o
f $5
is w
ell o
utsi
de th
e pe
er g
roup
rang
e of
$1
0-$3
0.
—Ty
pica
lly, e
mpl
oyer
s ch
arge
the
sam
e of
fice
visi
t cop
ay fo
r men
tal h
ealth
ser
vice
s as
are
ch
arge
d fo
r all
othe
r offi
ce v
isits
Sin
ce N
atio
nal G
rid a
lread
y ha
s hi
gh in
-net
wor
k ut
ilizat
ion,
adj
ustin
g th
e ou
t-of-n
etw
ork
dedu
ctib
les
and
coin
sura
nce
up to
the
com
petit
or g
roup
ave
rage
wou
ld h
ave
little
impa
ct o
n ov
eral
l cos
ts a
nd m
inim
al re
actio
n fro
m e
mpl
oyee
s
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 16 of 36
159
©20
06 T
ower
s Pe
rrin
16
Act
ive
Med
ical
Ben
efit
s
Ove
rall,
Key
span
’sco
mpe
titiv
e po
sitio
ning
is la
rgel
y dr
iven
by
thei
r in-
netw
ork
dedu
ctib
le
whi
ch is
wel
l abo
ve th
e av
erag
e of
the
com
para
tor g
roup
Thei
r coi
nsur
ance
leve
l of 9
0% is
on
par w
ith th
e av
erag
e fo
r the
pee
r gro
up, a
nd th
e co
pay
amou
nt o
f $15
is s
light
ly b
ette
r tha
n th
e pe
er g
roup
Key
span
’s in
divi
dual
con
tribu
tion
leve
l, ho
wev
er, i
s 30
% h
ighe
r tha
n th
eav
erag
e in
divi
dual
con
tribu
tion
leve
l of t
he p
eer g
roup
—W
hile
som
e of
the
peer
gro
up c
ompa
nies
may
offe
r les
s ric
h be
nefit
s th
an
Key
span
, the
ir co
ntrib
utio
ns m
ay b
e m
ore
in li
ne w
ith th
eir b
enef
it pr
ogra
m o
fferin
gIf
in-n
etw
ork
utili
zatio
n is
low
, Key
span
cou
ld c
onsi
der a
djus
ting
the
out-o
f-net
wor
k de
duct
ible
s an
d ou
t of p
ocke
t max
imum
s up
to th
e co
mpe
titor
gro
up a
vera
ge
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 17 of 36
160
©20
06 T
ower
s Pe
rrin
17
Act
ive
Med
ical
Ben
efit
s
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
’s a
nd K
eysp
anco
mpa
re to
thei
r pee
rs b
oth
in te
rms
of g
ross
ben
efit
valu
e of
med
ical
pla
ns, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee c
ontri
butio
ns)
IQ
DO
PK
AG
MB
SC
EN
JL
HR
F
NL
KD
PJ
CB
HS
IM
ER
OQ
AG
F
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 18 of 36
161
©20
06 T
ower
s Pe
rrin
18
Den
tal B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
of a
ctiv
e de
ntal
pro
gram
sIn
term
s of
Tot
al V
alue
, Nat
iona
l Grid
’s d
esig
ns a
re b
ette
r tha
n th
e av
erag
e,
whe
reas
Key
span
’sde
sign
s ar
e be
low
the
aver
age
Bec
ause
Key
span
’sco
ntrib
utio
ns a
re a
bout
ave
rage
, whe
reas
Nat
iona
l Grid
’s
cont
ribut
ions
are
bel
ow th
e av
erag
e, N
atio
nal G
rid’s
Em
ploy
er V
alue
com
petit
ive
posi
tioni
ng g
ets
muc
h be
tter,
whe
reas
Key
span
’sw
orse
ns
Dent
al S
core
and
Ran
k Scor
eR
ank/
21Em
ploy
er V
alue
Nat
iona
l Grid
125.
37
Key
span
79.5
16
Tota
l Val
ue
Nat
iona
l Grid
101.
59
Key
span
111.
93
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 19 of 36
162
©20
06 T
ower
s Pe
rrin
19
Den
tal B
enef
its
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
s
Key
Pla
n D
esig
n Fe
atur
es -D
enta
l Ben
efit
Nat
iona
l Grid
K
eysp
an
Ran
geAv
erag
eAn
nual
Ded
uctib
leP
er P
erso
n: $
50P
er P
erso
n $5
0 Fa
mily
: $15
0$0
-$75
(Ind
) $
0-$2
25 (F
am)
$40
(Ind)
$10
0 (F
am)
Annu
al M
axim
umP
reve
ntat
ive &
Bas
ic: $
1,50
0/pe
rson
(e
xclu
des
orth
odon
tia) M
ajor
$2,
000/
pers
on
(exc
lude
s or
thod
ontia
)
$2,0
00/P
erso
n (e
xclu
des
orth
odon
tia)
$100
0-$2
500
$1,7
00
Prev
enta
tive
Ser
vice
s10
0% b
efor
e de
duct
ible
, 2 c
lean
ings
/ yea
r10
0% b
efor
e de
duct
ible
, 3
clea
ning
s/ye
ar80
%-1
00%
, 2-3
cle
anin
gs p
er y
ear
100%
, 2 c
lean
ings
per
yea
r
Basi
c Re
stor
ativ
e80
%80
%70
%-1
00%
80%
Maj
or R
esto
rativ
e60
%, e
very
5 y
ears
50%
eve
ry 5
yea
rs50
%-8
0%60
%O
rtho
dont
ia C
over
age
100%
50%
50%
-100
%60
%
Ort
hodo
ntia
Max
imum
$1,8
00 p
er li
fetim
e$2
,000
$7
50-$
2500
$1,7
00
Out
of N
etw
ork
Ded
uctib
leN
/AN
/A$0
-$20
0 (In
d)
$0-
$600
(Fam
)$8
0 (In
d), $
220
(Fam
)A
nnua
l Max
imum
N/A
N/A
$150
0-$2
000
$1,7
00M
onth
ly E
mpl
oyee
Con
tribu
tions
Em
ploy
ee$8
.20
$17
$3.1
5-$7
0$1
4Fa
mily
$23.
37
$43
$8-$
160
$44
Com
parit
or G
roup
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 20 of 36
163
©20
06 T
ower
s Pe
rrin
20
Den
tal B
enef
its
The
key
fact
ors
driv
ing
Nat
iona
l Grid
’s d
enta
l pro
gram
s to
be
slig
htly
rich
er th
an
som
e of
thei
r com
petit
ors
are
thei
r low
em
ploy
ee c
ontri
butio
ns (a
bout
hal
f of t
he
aver
age
cont
ribut
ion
rate
s), a
nd 1
00%
orth
odon
tia c
over
age
The
aver
age
orth
odon
tia c
over
age
is 6
0%; N
atio
nal G
rid c
ould
intro
duce
som
e co
st s
harin
g fo
r orth
odon
tia a
nd s
till r
emai
n co
mpe
titiv
e w
ithin
thei
r pee
r gro
up,
espe
cial
ly s
ince
the
max
imum
is o
n pa
r with
the
aver
age
Key
span
’sde
ntal
pla
ns a
re c
onsi
dere
d le
ss c
ompe
titiv
e pr
imar
ily b
ecau
se m
ajor
re
stor
ativ
e an
d or
thod
ontia
ser
vice
s ar
e co
vere
d at
a lo
wer
per
cent
age
than
the
aver
age
for t
he p
eer g
roup
.Th
e or
thod
ontia
max
imum
, how
ever
, is
gene
rous
rela
tive
to th
e av
erag
eC
ontri
butio
ns a
re in
line
with
the
aver
age,
thou
gh m
uch
high
er th
an N
atio
nal
Grid
’s c
ontri
butio
ns
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 21 of 36
164
©20
06 T
ower
s Pe
rrin
21
Den
tal B
enef
its
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
and
Key
span
com
pare
to th
eir p
eers
bot
h in
term
s of
gro
ss b
enef
it va
lue
of d
enta
l pla
ns, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee c
ontri
butio
ns)
IG
EO
LH
NC
KF
SJ
PR
QA
MB
D
KP
OQ
AC
SI
MJ
DG
RE
LH
NF
B
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 22 of 36
165
©20
06 T
ower
s Pe
rrin
22
Life
Ins
uran
ce/A
D&
D B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to
thei
r pee
r gro
up in
term
s of
life
insu
ranc
e an
d A
D&
D p
rogr
ams
In te
rms
of T
otal
Val
ue, N
atio
nal G
rid’s
ove
rall
desi
gns
are
mor
e ge
nero
us th
an th
e av
erag
e, w
here
as K
eysp
an’s
desi
gns
are
belo
w th
e av
erag
e (e
.g.,
Nat
iona
l Grid
sup
ports
2x
pay
for b
asic
life
, whe
reas
Key
span
sup
ports
onl
y 1x
pay
)E
mpl
oyer
Val
ues
are
driv
en b
y th
e op
tiona
l ben
efits
(e.g
. opt
iona
l life
, spo
use
and
depe
nden
t life
) and
the
asso
ciat
ed e
mpl
oyee
con
tribu
tion
—N
atio
nal G
rid’s
com
petit
ive
posi
tioni
ng im
prov
es d
ue to
opt
iona
l life
con
tribu
tion
rate
s th
at a
re s
light
ly b
ette
r tha
n th
e av
erag
e, w
here
as K
eysp
an’s
posi
tion
decl
ines
due
to
high
er th
an a
vera
ge o
ptio
nal l
ife ra
tes
Deat
h - A
ctiv
e S
core
and
Ran
k
Scor
eR
ank/
21Em
ploy
er V
alue
Nat
iona
l Grid
137.
96
Key
span
86.5
14
Tota
l Val
ue
Nat
iona
l Grid
117.
45
Key
span
102.
99
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 23 of 36
166
©20
06 T
ower
s Pe
rrin
23
Act
ive
Life
Ins
uran
ce/A
D&
D C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
sK
ey P
lan
Des
igns
- D
eath
Ben
efit
Nat
iona
l Gri
dK
eysp
anR
ange
Ave
rage
Bas
ic2
x pa
y1
x pa
y.7
5 x
pay-
2.5
x p
ay1
x pa
yM
axim
um
$1,5
00,0
00$5
00,0
00$3
0,00
0- u
nlim
ited
$815
,833
Sup
plem
enta
lE
mpl
oyee
opt
ion
1 to
5 x
pay
in m
ultip
les
of 1
x p
ay1
to 5
x p
ay in
mul
tiple
s of
1 x
pay
1-2
pay
to 1
-10
pay
1-5
pay
Min
imum
N/A
$10,
000
N/A
N/A
Max
mim
um
$1,0
00,0
00$1
,000
,000
$375
,000
-unl
imite
d$2
mill
ion
Dep
ende
ntS
pous
e$2
5,00
0 or
$50
,000
Em
ploy
ee o
ptio
n $1
0,00
0 to
$1
00,0
00 in
mul
itipl
es o
f $10
,000
$2,0
00-$
250,
000
N/A
Chi
ldre
n:$2
,500
, $4,
000,
or $
10,0
00$2
,000
-$4,
000
$1,0
00-$
30,0
00N
/A
Acc
iden
tal D
eath
-Act
ive
Par
ticip
atio
n R
equi
rem
ents
1 m
onth
of s
ervic
eN
one
1 m
onth
-non
eN
one
Mon
thly
Em
ploy
ee C
ontri
butio
nsN
one
Non
eN
one
Non
eD
eath
Ben
efit
Am
ount
2 x
pay
$200
,000
0-2.
5 x
pay,
max
$2.
5 m
illio
n1
x pa
y
Com
pari
tor
Gro
up
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 24 of 36
167
©20
06 T
ower
s Pe
rrin
24
Life
Ins
uran
ce/A
D&
D B
enef
its
The
key
fact
ors
driv
ing
Nat
iona
l Grid
’s li
fe in
sura
nce
and
AD
&D
pro
gram
s to
be
mor
e ric
h th
an s
ome
of th
eir c
ompe
titor
s ar
e th
eir h
igh
basi
c lif
e an
d A
D&
D b
enef
it am
ount
s (e
.g. 2
x pa
y)Th
e av
erag
e ba
sic
life
bene
fit is
one
tim
es p
ay; N
atio
nal G
rid’s
is tw
o tim
es p
ay,
and
the
bene
fit m
axim
um is
alm
ost t
wic
e th
e av
erag
e be
nefit
max
imum
The
aver
age
AD
&D
ben
efit
amou
nt is
one
tim
es p
ay; N
atio
nal G
rid’s
is tw
o tim
es
pay
Nat
iona
l Grid
com
pare
s w
ell w
ith th
eir c
ompe
titor
s in
term
s of
sup
plem
enta
l life
be
nefit
s,
Spo
use
life
bene
fits
are
belo
w c
ompe
titiv
e no
rms
Ove
rall,
Key
span
’sco
mpe
titiv
e po
sitio
ning
is la
rgel
y dr
iven
by
thei
r low
er th
an
aver
age
basi
c lif
e m
axim
um o
f $50
0,00
0 co
mpa
red
to th
e av
erag
e of
the
com
petit
or
com
pani
es o
f app
roxi
mat
ely
$800
,000
Key
span
com
pare
s w
ell w
ith th
eir c
ompe
titor
s in
term
s of
the
basi
c lif
e be
nefit
at
one
times
pay
and
sup
plem
enta
l life
ben
efit
optio
ns a
t one
to fi
ve ti
mes
pay
, and
is
muc
h be
tter t
han
the
aver
age
in te
rms
of th
e A
D&
D b
enef
it am
ount
of $
200,
000
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 25 of 36
168
©20
06 T
ower
s Pe
rrin
25
Act
ive
Life
Ins
uran
ce a
nd A
D&
D B
enef
it
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
and
Key
span
com
pare
to th
eir p
eers
bot
h in
term
s of
gro
ss b
enef
it va
lue
of li
fe in
sura
nce
and
AD
&D
, as
wel
l as
empl
oyer
-pro
vide
d va
lue
(i.e.
, net
of e
mpl
oyee
con
tribu
tions
)
KB
FL
IC
OG
HD
PA
JN
SM
RE
Q
JA
FL
IG
OC
HD
EB
PN
RM
SK
Q
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 26 of 36
169
©20
06 T
ower
s Pe
rrin
26
Sho
rt T
erm
Dis
abili
ty S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to
thei
r pee
r gro
up in
term
s of
STD
pro
gram
sIn
term
s of
Tot
al V
alue
, bot
h N
atio
nal G
rid a
nd K
eysp
an’s
over
all d
esig
ns a
re b
elow
av
erag
e re
lativ
e to
thei
r com
petit
ors
(e.g
., bo
th N
atio
nal G
rid a
nd K
eysp
an p
rovi
de 1
00%
of
pay
for 1
wee
k at
1 y
ear o
f ser
vice
, and
5 w
eeks
at 5
yea
rs o
f ser
vice
, com
pare
d to
the
com
petit
or a
vera
ge o
f 9 a
nd 1
2 w
eeks
at 1
00%
, res
pect
ivel
yB
oth
Nat
iona
l Grid
’s a
nd K
eysp
an’s
Em
ploy
er V
alue
com
petit
ive
posi
tioni
ng im
prov
es
slig
htly
rela
tive
to th
e To
tal V
alue
due
to th
e fa
ct th
at tw
o em
ploy
ers
(O a
nd P
) in
the
com
para
tor g
roup
requ
ire e
mpl
oyee
con
tribu
tions
for t
he s
alar
y co
ntin
uanc
e pl
anS
TD re
sults
on
thei
r ow
n ca
n be
ske
wed
by
the
bene
fit p
erio
d (i.
e., t
he b
enef
it pe
riod
varie
s fro
m 3
mon
ths
to 1
yea
r am
ongs
t the
gro
up),
as a
resu
lt it
is im
porta
nt to
revi
ew S
TD a
nd
LTD
on
a co
mbi
ned
basi
s (re
fer t
o pa
ge 3
3)
Shor
t Ter
m D
isab
ility
Sco
re a
nd R
ank
Scor
eR
ank/
21Em
ploy
er V
alue
Nat
iona
l Grid
102.
813
Key
span
96.7
17
Tota
l Val
ue
Nat
iona
l Grid
98.3
15
Key
span
92.4
19
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 27 of 36
170
©20
06 T
ower
s Pe
rrin
27
Sho
rt T
erm
Dis
abili
ty C
ompa
riso
n
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
sSh
ort T
erm
Dis
abili
ty
Nat
iona
l Grid
K
eysp
an
Rang
eAv
erag
eSi
ck P
ay1s
t day
of d
isab
ility
1st d
ay o
f dis
abili
ty1s
t day
of d
isab
ility
1st d
ay o
f dis
abili
ty
Bene
fit A
mou
ntSi
ck P
ayY
ears
of S
ervic
eW
eeks
of P
ay a
t 100
%W
eeks
of P
ay a
t 100
%W
eeks
of P
ay a
t 100
%W
eeks
of P
ay a
t 100
%1
11
1-26
95
55
1-26
1210
1010
1-30
1415
1515
1-35
1520
2020
1-40
17
Sala
ry C
ontin
uanc
eE
nd o
f Sic
k P
ayE
nd o
f Sic
k P
ayE
nd o
f sic
k pa
y- 6
day
sE
nd o
f sic
k pa
y
Sala
ry C
ontin
uanc
e Am
ount
70%
of p
ay; p
ayab
le fo
r 52
wee
ks p
er y
ear
50%
of p
ay; p
ayab
le fo
r 13
wee
ks p
er d
isab
ility
60%
for 2
6 w
eeks
- 10
0% fo
r 6 m
onth
s,
less
Prim
ary
Soc
ial
Sec
urity
and
less
D
epen
dent
Soc
ial
Sec
urity
100%
for 3
mon
ths
Com
parit
or G
roup
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 28 of 36
171
©20
06 T
ower
s Pe
rrin
28
Sho
rt T
erm
Dis
abili
ty
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
and
Key
span
co
mpa
re to
thei
r pee
rs b
oth
in te
rms
of g
ross
ben
efit
valu
e of
STD
pla
ns, a
s w
ell a
s em
ploy
er-p
rovi
ded
valu
e (i.
e., n
et o
f em
ploy
ee c
ontri
butio
ns) H
EL
BF
GN
SR
KC
DP
QM
AJ
OI
RE
LB
FG
NP
0I
KD
CQ
MA
JH
S
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 29 of 36
172
©20
06 T
ower
s Pe
rrin
29
Long
Ter
m D
isab
ility
Ben
efit
Sco
re a
nd R
ank
Long
Ter
m D
isab
ility
Sco
re a
nd R
ank
Sco
reR
ank/
21Em
ploy
er V
alue
Nat
iona
l Grid
113.
57
Key
span
7.3
20
Tota
l Val
ue
Nat
iona
l Grid
93.2
12
Key
span
81.0
18
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to th
eir p
eer g
roup
in te
rms
of L
TD p
rogr
ams
Tota
l Val
ue re
sults
for L
TD a
re la
rgel
y dr
iven
by
the
bene
fit c
omm
ence
men
t dat
e, d
urat
ion
of th
e be
nefit
, the
per
cent
of p
ay c
over
ed, a
nd m
axim
um b
enef
itA
lthou
gh b
oth
Nat
iona
l Grid
and
Key
span
offe
r a b
asic
ben
efit
of60
% o
f pay
, whi
ch is
hi
gher
than
the
aver
age
of 5
0%, c
omm
ence
men
t dat
es a
nd d
urat
ion
driv
e co
mpe
titiv
e po
sitio
ning
As
men
tione
d w
hen
revi
ewin
g S
TD b
enef
its, f
or th
is re
ason
it is
impo
rtant
to lo
ok a
t S
TD a
nd L
TD c
ombi
ned
Em
ploy
er V
alue
s sh
ift m
ore
favo
rabl
y fo
r Nat
iona
l Grid
sin
ce n
o em
ploy
ee c
ontri
butio
ns a
re
requ
ired,
whe
reas
the
conv
erse
is tr
ue fo
r Key
span
due
to L
TD c
ontri
butio
n le
vels
Oth
er tw
o ot
her e
mpl
oyer
s (C
and
N) r
equi
re e
mpl
oyee
con
tribu
tions
for b
asic
LTD
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 30 of 36
173
©20
06 T
ower
s Pe
rrin
30
Long
Ter
m D
isab
ility
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
s
Key
Plan
Des
ign
Feat
ures
- Lo
ng T
erm
Dis
abili
ty
Nat
iona
l Grid
K
eysp
an
Ran
ge
Ave
rage
Co
mm
ence
men
tA
fter E
xhau
stio
n of
sho
rt-te
rm
disa
bilit
y be
nefit
sLa
ter o
f 90
cale
ndar
day
s of
dis
abili
ty o
r ex
haus
tion
of s
hort-
term
dis
abili
ty b
enef
its12
wee
ks- 2
6 w
eeks
20 w
eeks
Dura
tion
Men
tal H
ealth
/Che
mic
al D
epen
denc
yTo
age
65
24 M
onth
s24
mon
ths-
to a
ge 6
524
mon
ths
Amou
nt60
% o
f pay
, Les
s P
rimar
y S
ocia
l S
ecur
ity60
% o
f pay
, Les
s P
rimar
y S
ocia
l S
ecur
ityLe
ss D
epen
dent
Soc
ial S
ecur
ity,
Less
Pen
sion
Ben
efits
35%
of p
ay- 6
6.67
% o
f pay
(les
s pr
imar
y S
S a
nd d
epen
dent
SS
)50
% o
f pay
(les
s pr
imar
y S
S a
nd
depe
nden
t SS
)
Max
imum
Fro
m a
ll So
urce
s70
% o
f pay
$15,
000
per m
onth
$5,0
00-$
25,0
00$1
1,00
0
Less
Prim
ary
Soc
ial S
ecur
ityLe
ss P
rimar
y S
ocia
l Sec
urity
Less
Prim
ary
Soc
ial S
ecur
ityLe
ss P
rimar
y S
ocia
l Sec
urity
Less
Dep
ende
nt S
ocia
l Sec
urity
Less
Dep
ende
nt S
ocia
l Sec
urity
Less
Dep
ende
nt S
ocia
l Sec
urity
Less
Dep
ende
nt S
ocia
l Sec
urity
Com
parit
or G
roup
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 31 of 36
174
©20
06 T
ower
s Pe
rrin
31
Long
Ter
m D
isab
ility
Ben
efit
The
follo
win
g ba
r cha
rt fu
rther
illu
stra
tes
how
Nat
iona
l Grid
and
Key
span
com
pare
to th
eir p
eers
bot
h in
term
s of
gro
ss b
enef
it va
lue
of L
TD p
lans
, as
wel
l as
empl
oyer
-pro
vide
d va
lue
(i.e.
, net
of e
mpl
oyee
con
tribu
tions
)
DO
RI
SL
PQ
GH
EF
CM
AB
JN
K
QC
FP
OM
HD
BJ
LN
KG
RI
SE
A
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 32 of 36
175
©20
06 T
ower
s Pe
rrin
32
Sho
rt t
erm
Dis
abili
ty a
nd L
ong
Ter
m D
isab
ility
As
prev
ious
ly m
entio
ned,
bec
ause
diff
erin
g el
imin
atio
n pe
riods
can
ske
w
resu
lts w
hen
look
ing
at S
TD a
nd L
TD b
enef
its in
divi
dual
ly, i
t is
also
impo
rtant
to
look
at t
he e
ntire
dis
abilit
y co
ntin
uum
NM
LB
AD
IR
KH
CF
OE
QS
JP
G
RN
DP
OA
CE
SJ
IF
KM
GL
BH
Q
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 33 of 36
176
©20
06 T
ower
s Pe
rrin
33
Vac
atio
n an
d H
olid
ay B
enef
it S
core
and
Ran
k
The
follo
win
g ta
ble
illust
rate
s N
atio
nal G
rid’s
and
Key
span
’sco
mpe
titiv
e po
sitio
ning
rela
tive
to
thei
r pee
r gro
up in
term
s of
vac
atio
n an
d ho
liday
pro
gram
sIn
term
s of
Tot
al V
alue
and
Em
ploy
er V
alue
, Nat
iona
l Grid
’s a
nd K
eysp
an’s
over
all d
esig
ns
are
mor
e ge
nero
us th
an th
e av
erag
eW
hile
Nat
iona
l Grid
’s v
acat
ion
allo
wan
ce is
low
er th
an th
e co
mpe
titiv
e av
erag
e at
ear
lier
year
s of
ser
vice
, the
vac
atio
n ca
rryov
er p
rovi
sion
is m
ore
gene
rous
, driv
ing
over
all
com
petit
ive
posi
tioni
ng—
Oth
er e
mpl
oyer
s in
the
com
para
tor g
roup
, inc
ludi
ng K
eysp
an, e
ither
do
not a
llow
va
catio
n da
y ca
rryov
er, o
r hav
e lo
w li
mits
on
the
num
ber o
f day
sth
at c
an b
e ca
rried
ov
erK
eysp
an’s
over
all v
acat
ion
prac
tices
are
in-li
ne/s
light
ly m
ore
gene
rous
than
the
com
petit
or
aver
age Va
catio
n an
d Ho
liday
Sco
re a
nd R
ank
Scor
eRa
nk/2
1Em
ploy
er V
alue
Nat
iona
l Grid
105.
24
Key
span
101.
69
Tota
l Val
ue
Nat
iona
l Grid
105.
24
Key
span
101.
69
Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 34 of 36
177
©20
06 T
ower
s Pe
rrin
34
Vac
atio
n an
d H
olid
ay B
enef
its
Com
pari
son
The
follo
win
g ta
ble
com
pare
s N
atio
nal G
rid’s
and
Key
span
’spl
an d
esig
n re
lativ
e to
th
eir p
eer g
roup
pla
n de
sign
s
Vaca
tion
and
Hol
iday
Pra
ctic
es
Nat
iona
l Grid
Rang
eAv
erag
eH
olid
ays
117-
12 d
ays
10 d
ays
Floa
ting
holid
ays
10-
4 da
ys2
days
Vac
atio
nY
ears
of S
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Narragansett Electric Company d/b/a National Grid Docket No. R.I.P.U.C. ____ Schedule NG-WFD-10 Page 36 of 36
179
Testim
ony of
K. K
ateregga
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
PRE-FILED DIRECT TESTIMONY
OF
Dr. Kimbugwe A. Kateregga
180
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Table of Contents I. Qualifications.................................................................................................................1 II. Purpose of Testimony ....................................................................................................2 III. Development of Depreciation Rates ..............................................................................2 IV. 2009 Depreciation Rate Study .......................................................................................6 V. Summary ......................................................................................................................11
181
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 1 of 12
Q. WOULD YOU PLEASE STATE YOUR NAME AND BUSINESS ADDRESS? 1
A. My name is Kimbugwe A. Kateregga. My business address is 17595 S. Tamiami 2
Trail, Suite 212, Fort Myers, Florida 33908. 3
Q. WHAT IS YOUR OCCUPATION? 4
A. I am a Vice President and Consultant of Foster Associates, Inc. 5
I. QUALIFICATIONS 6
Q. WOULD YOU BRIEFLY DESCRIBE YOUR EDUCATIONAL TRAINING 7
AND PROFESSIONAL BACKGROUND? 8
A. I received a B.Sc. (Eng.) degree in Civil Engineering from Makerere University in 9
Uganda and a M.Sc. degree in Management Science from the University of Wales in 10
1982. I also received a Ph.D. degree in Engineering Valuation from Iowa State Uni-11
versity in 1987. The subject of my Masters thesis was forecasting equipment lives 12
and my Doctoral research and dissertation addressed technological forecasting mod-13
els and their applications in capital recovery. I have made presentations to regulators, 14
committees, and conferences on capital recovery issues, published articles in the field 15
of depreciation and technological forecasting and taught college level mathematics 16
and statistics. I am a member of Phi Kappa Phi, the American Association of Cost 17
Engineers and the Society of Depreciation Professionals. 18
Q. WHAT IS YOUR PROFESSIONAL EXPERIENCE? 19
A. I joined the firm of Foster Associates in 1986 as a Staff Consultant and specialist in 20
depreciation. Prior to joining Foster Associates, I was employed as a Research Assis-21
tant at Iowa State University. I served under contract in this capacity between 1983 22
and 1986 to investigate marginal cost pricing issues and the application of techno-23
logical forecasting models in predicting the service life of industrial property. The 24
findings of this research have been implemented in the telecommunications industry. 25
Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE A REGULATORY BODY? 26
182
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 2 of 12
A. Yes. I have testified in several proceedings before the Arizona, Arkansas, Montana, 1
New York, New Jersey and Rhode Island public service commissions. 2
II. PURPOSE OF TESTIMONY 3
Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? 4
A. Foster Associates was engaged by National Grid to conduct a 2009 depreciation rate 5
study for electric properties owned and operated by The Narragansett Electric Com-6
pany (NEC) d/b/a National Grid. The purpose of my testimony is to sponsor and de-7
scribe the study conducted by Foster Associates. Current depreciation rates were 8
adopted pursuant to a Settlement Agreement in Docket No. 2290. 9
III. DEVELOPMENT OF DEPRECIATION RATES 10
Q. WOULD YOU PLEASE EXPLAIN WHY DEPRECIATION STUDIES ARE 11
NEEDED FOR ACCOUNTING AND RATEMAKING PURPOSES? 12
A. The goal of depreciation accounting is to charge to operations a reasonable estimate 13
of the cost of the service potential of an asset (or group of assets) consumed during an 14
accounting interval. A number of depreciation systems have been developed to 15
achieve this objective, most of which employ time as the apportionment base. 16
Implementation of a time-based (or age-life system) of depreciation accounting 17
requires the estimation of several parameters or statistics related to a plant account. 18
The average service life of a vintage, for example, is a statistic that will not be 19
known with certainty until all units from the original placement have been retired 20
from service. A vintage average service life, therefore, must be estimated initially 21
and periodically revised as indications of the eventual average service life becomes 22
more certain. Future net salvage rates and projection curves, which describe the ex-23
pected distribution of retirements over time, are also estimated parameters of a de-24
preciation system that are subject to future revisions. Depreciation studies should be 25
conducted periodically to assess the continuing reasonableness of parameters and ac-26
crual rates derived from prior estimates. 27
183
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 3 of 12
The need for periodic depreciation studies is also a derivative of the ratemaking 1
process which establishes prices for utility services based on costs. Absent regula-2
tion, deficient or excessive depreciation rates will produce no adverse consequence 3
other than a systematic over or understatement of the accounting measurement of 4
earnings. While a continuance of such practices may not comport with the goals of 5
depreciation accounting, the achievement of capital recovery is not dependent upon 6
either the amount or the timing of depreciation expense for an unregulated firm. In 7
the case of a regulated utility, however, recovery of investor-supplied capital is de-8
pendent upon allowed revenues, which are in turn dependent upon approved levels 9
of depreciation expense. Periodic reviews of depreciation rates are, therefore, essen-10
tial to the achievement of timely capital recovery for a regulated utility. 11
It is also important to recognize that revenue associated with depreciation is a 12
significant source of internally generated funds used to finance plant replacements 13
and new capacity additions. This is not to suggest that internal cash generation 14
should be substituted for the goals of depreciation accounting. However, the poten-15
tial for realizing a reduction in the marginal cost of external financing provides an 16
added incentive for conducting periodic depreciation studies and adopting proper 17
depreciation rates. 18
Q. WHAT ARE THE PRINCIPAL ACTIVITIES INVOLVED IN CONDUCTING 19
A DEPRECIATION STUDY? 20
A. The first step in conducting a depreciation study is the collection of plant accounting 21
data needed to conduct a statistical analysis of past retirement experience. Data are 22
also collected to permit an analysis of the relationship between retirements and real-23
ized gross salvage and removal expense. The data collection phase should include a 24
verification of the accuracy of the plant accounting records and a reconciliation of the 25
assembled data to the official plant records of the company. 26
The next step in a depreciation study is the estimation of service life statistics 27
from an analysis of past retirement experience. The term life analysis is used to de-28
184
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 4 of 12
scribe the activities undertaken in this step to obtain a mathematical description of 1
the forces of retirement acting upon a plant category. The mathematical expressions 2
used to describe these forces are known as survival functions or survivor curves. 3
Life indications obtained from an analysis of past retirement experience are 4
blended with expectations about the future to obtain an appropriate projection life 5
curve. This step, called life estimation, is concerned with predicting the expected re-6
maining life of property units still exposed to the forces of retirement. The amount of 7
weight given to the analysis of historical data will depend upon the extent to which 8
past retirement experience is considered descriptive of the future. 9
An estimate of the net salvage rate applicable to future retirements is usually 10
obtained from an analysis of the gross salvage and removal expense realized in the 11
past. An analysis of past experience (including an examination of trends over time) 12
provides a baseline for estimating future salvage and cost of removal. Consideration, 13
however, should be given to events that may cause deviations from the net salvage 14
realized in the past. Among the factors which should be considered are the age of 15
plant retirements; the portion of retirements that will be reused; changes in the 16
method of removing plant; the type of plant to be retired in the future; inflation ex-17
pectations; the shape of the projection life curve; and economic conditions that may 18
warrant greater or lesser weight to be given to the net salvage observed in the past. 19
A comprehensive depreciation study will also include an analysis of the ade-20
quacy of the recorded depreciation reserve. The purpose of such an analysis is to 21
compare the current balance in the recorded reserve with the balance required to 22
achieve the goals and objectives of depreciation accounting if the amount and timing 23
of future retirements and net salvage are realized exactly as predicted. The difference 24
between the required (or theoretical) reserve and the recorded reserve provides a 25
measurement of the expected excess or shortfall that will remain in the depreciation 26
reserve if corrective action is not taken to extinguish the reserve imbalance. 27
185
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 5 of 12
Although reserve records are typically maintained by various account classifi-1
cations, the total reserve for a company is the most important measure of the status 2
of the Company’s depreciation practices and procedures. Differences between the 3
theoretical reserve and the recorded reserve will arise as a normal occurrence when 4
service lives, dispersion patterns and salvage estimates are adjusted in the course of 5
depreciation reviews. Differences will also arise because of plant accounting activity 6
such as transfers and adjustments, which require an identification of reserves at a dif-7
ferent level from that maintained in the accounting system. It is appropriate, there-8
fore, and consistent with group depreciation theory, to periodically redistribute 9
recorded reserves among primary accounts based on the most recent estimates of re-10
tirement dispersion and salvage. A redistribution of the recorded reserve will provide 11
an initial reserve balance for each primary account consistent with the estimates of 12
retirement dispersion selected to describe mortality characteristics of the accounts 13
and establish a baseline against which future comparisons can be made. 14
Finally, parameters estimated from service life and net salvage studies are inte-15
grated into an appropriate formulation of an accrual rate based upon a selected de-16
preciation system. Three elements are needed to describe a depreciation system. The 17
sub-elements most widely used in constructing a depreciation system are shown in 18
Table 1 below. 19
Methods Procedures Techniques
Retirement Total Company Whole-LifeCompound-Interest Broad Group Remaining-LifeSinking-Fund Vintage Group Probable-LifeStraight-Line Equal-Life GroupDeclining Balance Unit SummationSum-of-Years'-Digits ItemExpensingUnit-of-ProductionNet Revenue
Table 1. Elements of a Depreciation System 20
186
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 6 of 12
These elements (i.e., method, procedure and technique) can be visualized as 1
three dimensions of a cube in which each face describes a variety of sub–elements 2
that can be combined to form a system. A depreciation system is therefore formed by 3
selecting a sub-element from each face such that the system contains one method, 4
one procedure and one technique. 5
IV. 2009 DEPRECIATION RATE STUDY 6
Q. DID NEC PROVIDE FOSTER ASSOCIATES PLANT ACCOUNTING DATA 7
FOR CONDUCTING THE 2009 DEPRECIATION STUDY? 8
A. Yes, they did. The database used in conducting the 2009 study was assembled by ap-9
pending 1995–2008 plant and reserve activity to the data base used in conducting the 10
1995 study. Detailed accounting transactions were extracted from the CPR system 11
and assigned transaction codes that describe the nature of the accounting activity. 12
Transaction codes for plant additions, for example, were used to distinguish normal 13
additions from acquisitions, purchases, reimbursements and adjustments. Similar 14
transaction codes were used to distinguish normal retirements from sales, reimburse-15
ments, abnormal retirements and adjustments. Transaction codes were also assigned 16
to transfers, capital leases, gross salvage, cost of removal and other accounting activ-17
ity considered in a depreciation study. 18
Prior to 1993, Narragansett Electric estimated the ageing of plant activity for 19
distribution mass plant accounts (Accounts 364.00 through 373.00) using an esti-20
mated projection life and curve for each account. Although theoretically sound for 21
accounts in which population parameters are known, in practice this method is 22
somewhat circular. The recorded plant activity is dependent upon the estimated pa-23
rameters which are themselves developed from the plant activity they generate. 24
Foster Associates was engaged by Narragansett Electric in 1993 to develop age 25
distributions for Accounts 364.00 through 373.00 that would be used to initiate a 26
first-in, first-out (FIFO) ageing process. The new age distributions at December 31, 27
187
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 7 of 12
1992 were used to populate the Company’s CPR system in September 1993. Minor 1
adjustments were recorded for January – September 1993 activity. The data base 2
used in the current study for these accounts contains opening age distributions at De-3
cember 31, 1992, and FIFO plant activity for 1993 through 2008. Plant installed 4
prior to 1966 is classified in a 1966 vintage. 5
The data base used in the 1995 study for all other transmission, distribution, 6
and general plant Accounts 390.00 (Structures and Improvements) and 397.00 7
(Communication Equipment) was constructed from the Company’s CPR system by 8
Company personnel. These plant records provided plant activity over the period 9
1969 through 1994 and age distributions of surviving plant at December 31, 1994. 10
Age distributions of plant exposed to retirement at the beginning of each activity 11
year were obtained by adding (or subtracting) transaction amounts to the coded age 12
distributions of surviving plant at the end of 1994. Coded age distributions of surviv-13
ing plant at the end of 1994 were then removed from the data base. This conversion 14
of the data base from a reverse construction of the historical arrangement to a for-15
ward construction was made to facilitate appending post–1994 transactions to the 16
data without removing or adjusting prior coded transactions. 17
The accuracy of the assembled data base for all accounts-except the FIFO mass 18
accounts-was verified over the period 1969–1994 in the 1995 study by comparing 19
the unadjusted plant history schedules derived in the study with the Company’s 20
ledger reports. The mass accounts were reconciled for post-1993 activity reflecting 21
the FIFO ageing process. 22
The accuracy and completeness of the database used in conducting the 2009 23
study was confirmed by Foster Associates for activity years 1995–2008 by compar-24
ing additions, retirements, transfers, adjustments and ending plant balance to the 25
regulated investments reported by NEC in FERC Form 1 electric plant in service re-26
ports. Age distributions of surviving plant at December 31, 2008 were reconciled to 27
the CPR. 28
188
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 8 of 12
Q. DID FOSTER ASSOCIATES CONDUCT STATISTICAL LIFE STUDIES FOR 1
NEC PLANT AND EQUIPMENT? 2
A. Yes, we did. As discussed in Schedule NG-KAK-1, all plant accounts were analyzed 3
using a technique in which first, second and third degree polynomials were fitted to a 4
set of observed retirement ratios. The resulting function can be expressed as a survi-5
vorship function, which is numerically integrated to obtain an estimate of the average 6
service life. The smoothed survivorship function is then fitted by a weighted least-7
squares procedure to the Iowa-curve family to obtain a mathematical description or 8
classification of the dispersion characteristics of the data. Service life indications de-9
rived from the statistical analyses were blended with informed judgment and expecta-10
tions about the future to obtain an appropriate projection life curve for each plant 11
category. 12
Q. DID FOSTER ASSOCIATES CONDUCT A NET SALVAGE ANALYSIS FOR 13
NEC PLANT AND EQUIPMENT? 14
A. Yes, we did. A five-year average analysis of the ratio of realized salvage and cost of 15
removal to associated retirements was used in the 2009 study for all depreciable cate-16
gories to: a) estimate realized net salvage rates; b) detect the emergence of historical 17
trends; and c) establish a basis for estimating future net salvage rates. The banding 18
analysis produced inconclusive indications of future net salvage ratios for reasons 19
outlined below. 20
Prior to the 1995 study, depreciation rates used by NEC did not include a net 21
salvage component; a net salvage rate of zero percent was implied for all plant ac-22
counts. While the 1995 study included a consideration of net salvage, accrual rates 23
and reserves were developed at the function level for net salvage and by primary ac-24
count for investment accruals. Upon implementation, NEC combined the function 25
net salvage rates within the investment rate for each primary account and continued 26
to record depreciation accruals and realized net savage in function level reserves. 27
189
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 9 of 12
In 2004 NEC migrated to a plant accounting system supported by Power Plant. 1
Function reserves were disaggregated in the conversion process to initialize reserves 2
by primary account. Accordingly, the earliest activity year in which realized net sal-3
vage is identifiable by primary account is 2004. This limited history (combined with 4
significant variability in realized net salvage as a percent of retirements) necessitated 5
an examination of how net salvage is charged to work orders and a back–casting of 6
current practices to prior activity years. 7
Starting in 2004 the Company allocates net salvage to retirement work orders 8
by applying appropriate ratios to associated capital additions. Statement E of Sched-9
ule NG-KAK-1 provides a computation of the composite ratio applied to primary 10
distribution account additions over the period 2004–2008. The resulting ratios were 11
applied to the sum of all additions over the period 1969–2008 for actual aged ac-12
counts and over the period 1993–2008 for FIFO aged accounts. The implied net sal-13
vage derived from this computation was expressed as a ratio to the sum of 14
retirements recorded over the corresponding period of additions to obtain a -29.02 15
percent as an estimate of future net salvage rates. A composite future net salvage rate 16
of –30 percent was, therefore, selected as a placeholder for all distribution accounts 17
pending the realization of additional activity years from which net salvage rates 18
among primary accounts may be distinguished.1 19
Q. DID FOSTER ASSOCIATES CONDUCT AN ANALYSIS OF RECORDED 20
DEPRECIATION RESERVES? 21
A. Yes. Statement C of Schedule NG-KAK-1 provides a comparison of NEC recorded, 22
computed and redistributed reserves at December 31, 2008. The recorded reserve was 23
$552,926,186 or 40.6 percent of the depreciable plant investment. The corresponding 24
computed reserve is $529,418,359 or 38.9 percent of the depreciable plant invest-25
1 A similar analysis of transmission accounts yielded unrealistic results as a consequence of insuffi-cient data. The current approved future net salvage of –20 percent was retained for all transmission ac-counts.
190
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 10 of 12
ment. A proportionate amount of the measured reserve imbalance of $23,507,827 will 1
be amortized over the composite weighted-average remaining life of each rate cate-2
gory using the remaining life depreciation rates proposed in this study. 3
Q. IS FOSTER ASSOCIATES RECOMMENDING A REBALANCING OF 4
DEPRECIATION RESERVES FOR NEC? 5
A. Yes, a redistribution of recorded reserves is considered appropriate for NEC at this 6
time. Offsetting reserve imbalances attributable to both the passage of time and pa-7
rameter adjustments recommended in the current study should be realigned among 8
primary accounts to reduce offsetting imbalances and increase depreciation rate sta-9
bility. Recorded reserves should also be realigned to establish reserves for subac-10
counts created subsequent to the adoption of current depreciation rates. 11
Recorded reserves for transmission and distribution plant accounts were rebal-12
anced by multiplying the calculated reserve for each primary account within a func-13
tion by the ratio of the function total recorded reserves to the function total 14
calculated reserve. The sum of the redistributed reserves within a function is, there-15
fore, equal to the function total recorded depreciation reserve before the redistribu-16
tion. Reserves for general amortizable categories were adjusted by replacing 17
recorded reserves with current measured theoretical reserves and distributing any re-18
serve imbalances to depreciable categories within the general plant function. 19
Q. WOULD YOU PLEASE DESCRIBE THE DEPRECIATION SYSTEM CUR-20
RENTLY APPROVED BY THE COMMISSION FOR NEC? 21
A. Current depreciation rates were developed for each primary account using a deprecia-22
tion system composed of the straight–line method, vintage group procedure, remain-23
ing–life technique. 24
The formulation of an account accrual rate using the currently approved depre-25
ciation system is given by: 26
191
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 11 of 12
1.0 Reserve Ratio Future NetSalvage RateAccrual Rate .Remaining Life
− −= 1
A remaining–life rate is equivalent to the sum of a whole-life rate and an amor-2
tization of any reserve imbalance over the estimated remaining life of a rate cate-3
gory. Stated as an equation, a remaining-life accrual rate is equivalent to 4
1.0 Average NetSalvage Computed Reserve Recorded ReserveAccrual RateAverage Life Remaining Life
− −= + 5
where both the computed reserve and the recorded reserve are expressed as ratios to 6
the plant in service. 7
Q. IS FOSTER ASSOCIATES RECOMMENDING A CHANGE IN THE 8
DEPRECIATION SYSTEM FOR NEC? 9
A. No, we are not. It is the opinion of Foster Associates that the currently approved sys-10
tem will remain appropriate for NEC, provided depreciation studies are conducted pe-11
riodically and parameters are routinely adjusted to reflect changing operating 12
conditions. It is also the opinion of Foster Associates that amortization accounting is 13
consistent with the goals and objectives of depreciation accounting and remains ap-14
propriate for the approved amortization categories. 15
V. SUMMARY 16
Q. WOULD YOU PLEASE SUMMARIZE THE DEPRECIATION RATES AND 17
ACCRUALS FOSTER ASSOCIATES IS RECOMMENDING FOR NEC IN 18
THE 2009 STUDY? 19
A. Table 2 below provides a summary of the changes in annual rates and accruals result-20
ing from adoption of the parameters and depreciation system recommended in the 21
2009 depreciation study. 22
192
THE NARRAGANSETT ELECTRIC COMPANY d/b/a NATIONAL GRID
Docket No. R.I.P.U.C. ____ Witness: Kateregga
Page 12 of 12
Foster Associates is recommending primary account depreciation rates equiva-1
lent to a composite rate of 3.20 percent. Depreciation expense is currently accrued at 2
rates that composite to 3.34 percent. The recommended change in the composite de-3
preciation rate is, therefore, a reduction of 0.14 percentage points. 4
A continued application of current rates would provide annualized depreciation 5
expense of $45,473,702 compared with an annualized expense of $43,499,404 using 6
the rates developed in this study. The proposed 2009 expense reduction is 7
$1,974,298. The computed change in annualized accruals includes a reduction of 8
$799,031 attributable to an amortization of a $23,507,827 reserve imbalance. The 9
remaining portion of the change is attributable to adjustments in service life and net 10
salvage statistics recommended in the 2009 study. 11
Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? 12
A. Yes, it does. 13
Function Current Proposed Difference Current Proposed DifferenceA B C D=C-B E F G=F-E
Transmission 2.29% 2.20% -0.09% 5,232,396$ 5,038,030$ (194,366)$ Distribution 3.53% 3.35% -0.18% 37,932,216 36,085,736 (1,846,480)General Plant 4.07% 4.19% 0.12% 2,309,090 2,375,638 66,548
Total 3.34% 3.20% -0.14% 45,473,702$ 43,499,404$ (1,974,298)$
Accrual Rate 2009 Annualized Accrual
Table 2. Current and Proposed Rates and Accruals
193
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G-K
AK
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The Narragansett Electric Company Schedule NG-KAK-1 Page 45 of 47
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The Narragansett Electric Company Schedule NG-KAK-1 Page 46 of 47
239
The Narragansett Electric Company Schedule NG-KAK-1 Page 47 of 47
240
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