Attorney General Peter F. Neronha announced that given the prospect of significant increases in supply-side energy rates this winter, the Office today is advocating that the Public Utilities Commission (PUC) consider all available options and approve a plan that will best mitigate Rhode Island Energy’s proposed rate changes for electric service, slated to take effect October 1, 2022.
As argued in a memo filed Thursday, September 15, Rhode Islanders are facing a potentially dramatic increase in Last Resort Service (“LRS”) energy supply rates, driven by the increase in the price of natural gas, the main generation source in the regional market. Additionally, demand for natural gas in the region rises in the winter because a large portion of New England’s heating sector also relies on natural gas as a fuel source. As described in the memo, the rate from last winter to this winter is expected increase approximately 28.5%.
“Energy bills in Rhode Island are essentially comprised of two distinct charges: a charge for obtaining a supply of energy, and a charge for distribution, that is, delivering that energy to customers. The former is a pass-through charge to ratepayers, from which Rhode Island Energy, like National Grid before it, cannot profit. The latter charge – for energy distribution – is where Rhode Island Energy can profit. Thus, the fight for fair and reasonable energy prices for Rhode Islanders must be fought on the energy distribution side. That is why it was critical for this Office earlier this year to intervene in the sale of National Grid to Rhode Island Energy and secure not only a three-year freeze in energy distribution rates but more than $200 million in energy distribution relief for Rhode Islanders. Those successes should mitigate some of the impact of increased energy supply charges this winter. But there is still more that the PUC can and should do, including giving ratepayers the option to defer payment of some of the increased supply cost until next year and re-allocating certain existing state funds to provide some relief,” said Rhode Island Attorney General Peter Neronha.
Although Rhode Island Energy is not permitted to profit from supplying energy, Rhode Islanders will nevertheless face increased rates on their bills. These market conditions hit at a tough time for Rhode Island consumers, whose household budgets have been upended by inflation in gasoline, food, and other essential consumer goods.
In May of 2022, the Attorney General objected to the sale of Narragansett Electric by National Grid to PPL Corporation, now Rhode Island Energy, ultimately leading to an agreement that secures $200 million in value for Rhode Island ratepayers along with mandated steps toward meeting Act on Climate goals. The benefits secured in that agreement will reduce this winter’s electric bills. Each consumer, regardless of income, will receive $63.72 in direct rate relief for use in the winter months.
In addition to this direct ratepayer relief, the Attorney General required that PPL forgo recovery of $103 million from ratepayers: $82 million in costs for new investments it will make as a result of the sale and $21 million of costs already incurred by National Grid. The DPUC’s decision would have allowed Rhode Island Energy to seek this $103 million from ratepayers. Also as a result of the agreement, there will be no increase in distribution charges for the next three years.
In addition to the relief already secured for consumers, the Attorney General asked the PUC to consider any and all options for relief, including:
Defer supply costs – The Attorney General has asked the PUC to offer Rhode Islanders the opportunity to opt-in to defer some of the supply charges to reduce the abnormally high rates likely this winter. For some, especially those with lower summer usage, deferring a portion of the increase from winter to summer months could help spread the shock of the increase and allow Rhode Islanders to manage their household expenses in a more predictable way. Predictability and the opportunity to save for anticipated future expenses are good for consumers faced with balancing many competing demands on a monthly budget.
Approve the Governor’s suggestion to allocate nearly $3.9 million in RGGI funds to bring additional relief to the most vulnerable – The Governor has suggested allocating $3,858,150 of Regional Greenhouse Gas Initiative (RGGI) funds to provide relief for low-income ratepayers. The RGGI is a cooperative effort between several east coast states, including Rhode Island, and includes a cap-and-trade system designed to reduce CO2 emissions from the energy sector, and can be used for, among other things, “direct rate relief for low-income consumers.” If the Office of Energy Resources disburses these RGGI funds to directly credit low-income utility bills, it will provide $104.84 in relief per eligible customer. Combined with the relief the Attorney General previously secured for all consumers, low-income consumers will not see an appreciable difference in winter electric bills this year. The Attorney General today urged the PUC to approve this measure to protect low-income consumers.
Defer the Customer Charge -The Governor has additionally suggested a deferral of the $6 (less for low-income residential customers) customer charge on all Rhode Island Energy electric bills. This charge is based on distribution and represents a simple shifting of a constant flat-fee from each customer from the winter rate bills to the summer rate bills. The Attorney General does not object to this proposal (by itself or in addition to other options) if the PUC determines deferral of this charge is appropriate and in the best interest of consumers.
An effort to better inform customers on budgeting and payment options – The Attorney General believes that Rhode Island’s customers are entitled to robust information from their utility provider so that they can make informed decisions about their energy usage and billing preferences. Ultimately, the utility should be working towards simple and understandable messaging so that consumers can understand the many components of their bills and how to plan for future expenses.
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