Facing scrutiny and potential rejection over proposed winter energy bill credits, Rhode Island Energy has pulled the plug on its $149 million discount plan, according to a letter sent Friday to state utility regulators.
But, the company will still have to come up with an alternative way to satisfy the rate relief requirements tied to the 2022 sale of the state gas and electric operations from National Grid to Rhode Island Energy’s parent company, PPL Corp.
Rhode Island Energy executives and Gov. Dan McKee championed a plan to provide bill credits over the next two winters, rather than dispersing smaller discounts over a much longer period of time. The proposal would have slashed customers’ electric bills by $20 to $30 per month, and cut gas bills by $40 to $50 per month, from January to March 2026 and again in the same three months of 2027 — the coldest and most expensive time of year.
Rhode Island Energy’s enthusiasm cooled under criticism from the Rhode Island Attorney’s General office and questions by the Public Utilities Commission (PUC). The politically appointed commission has final authority over the timing and distribution of the bill credits.
“The Company has come to the conclusion that the most likely outcome of the consideration of its tariff advice filing is either a rejection of the proposed miscellaneous bill credits or a modification to the calculation of and/or processing for the miscellaneous bill credits,” Adam Ramos, an attorney representing Rhode Island Energy, wrote in a Nov. 14 letter to the PUC.
Instead, the “best path forward” was to pull the proposal altogether, Ramos wrote.
The decision was first reported by WPRI-TV 12.
Michael Dalo, a spokesperson for Rhode Island Energy, acknowledged that the company’s proposal ran into “unexpected and unwarranted opposition.” He did not specify the source of the opposition in a statement on Monday.
“While we are disappointed with this development, supporting our customers through these challenging winter months remains a priority,” Dalo said. “We will continue to work closely with regulators and stakeholders through the Winter Volatility Docket to identify and advance other solutions that may provide relief to customers this winter.”
McKee in a statement Monday called the reversal of the proposal “flat-out unacceptable.”
“My administration negotiated this voluntary settlement with Rhode Island Energy to get families help now,” McKee said. “Without it, that relief gets stretched over 30 years and becomes barely noticeable on monthly bills. Rhode Islanders deserve real relief.”
State utility regulators in 2022 required the company to shield customers from shouldering the cost of tax and accounting changes associated with sale. Additional conditions and ratepayer protections were imposed by the Attorney General’s office under a separate settlement with PPL.
Crunching numbers
PPL initially estimated the dollar figure for its “hold harmless commitment” — sparing Rhode Island customers from tax expenses — at $240 million over 37 years. By concentrating the credits over a two-year-period, the value dropped to $149 million, according to the discount rate used by Rhode Island Energy. The Division of Public Utilities and Carriers, the administrative arm of the state utility agency, signed off on the plan in September, vetting the company’s math through an expert who determined its calculations “met appropriate accounting industry standards and were wholly accurate,” according to an Oct. 23 letter to the PUC.
The same day, Attorney General Peter Neronha accused Rhode Island Energy of lowballing the value of the credits, and in turn, shortchanging ratepayers by “tens of millions” of dollars. Neronha’s office in written filings argued that the formula used to determine present-day value of the credits was the wrong one, because it considered risks and benefits to company shareholders —- a separate group from the ratepayers the discounts are aimed to benefit. Alternative calculation methods put forth by an expert hired by Neronha’s office would have added up to $39 million more in total credits for Rhode Island Energy customers compared with the company’s proposal.
My administration negotiated this voluntary settlement with Rhode Island Energy to get families help now. Without it, that relief gets stretched over 30 years and becomes barely noticeable on monthly bills. Rhode Islanders deserve real relief.
Neronha said Monday the company’s withdrawal of its plan confirmed his reservations about “corporate greed, plain and simple.”
“By taking their ball and going home, Rhode Island Energy is exposing who they are as a company,” Neronha said in an emailed statement. “As soon as my Office pointed out that they were attempting to pull a fast one on Rhode Islanders, shortchanging consumers by tens of millions of dollars, they decided to pull their proposal rather than pay the full amount that they owe. This Company is clearly not interested in providing relief to energy consumers unless it benefits them.”
The PUC has yet to take a stand on the formula feud. However, its recent data requests to Rhode Island Energy suggest some hesitancy. For example, in an Oct. 22 series of questions — the fifth round of detailed questioning over the proposal — the commission sought clarification on how the company could bypass, or lower, its state tax bill by offering credits to customers. Rhode Island Energy in response said the tax costs were separated from the discounts, but acknowledged it would benefit from a reduced tax liability by offering bill credits, which in turn lowers its annual revenue.
The PUC is scheduled to hold a hearing Wednesday to review other ratepayer relief options for higher winter electric costs, including discounts that could be equal to or more than the Rhode Island Energy proposal.
This story was originally published by the Rhode Island Current.
