Legislators weigh options in wake of rate increase

John Howell
Posted 12/30/14

It may be those who sat quietly through the Public Utilities Commission’s (PUC) meeting last Tuesday – where electric rates of residential users were raised by 14.25 percent – who have the …

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Legislators weigh options in wake of rate increase

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It may be those who sat quietly through the Public Utilities Commission’s (PUC) meeting last Tuesday – where electric rates of residential users were raised by 14.25 percent – who have the final say on how the commission acts on future rate increases.

In contrast to many of those around them, state Rep. Grace Diaz and Representative-elect Robert Lancia were silent observers when the commission voted to increase the rates for the next 12 months.

Since the action, House Speaker Nicholas Mattiello, in response to questions, emailed, “The increase in utility rates is unacceptable and it will have a negative impact on our economic recovery.”

The commission went into the meeting faced with the prospect of increasing electric rates by more than 24 percent based on National Grid’s “pass through” cost. Although it was difficult to hear what was being said over the yells and chants of the audience, the commission agreed to spread the increase over 12 months rather than limit it to the six months that had been requested.

The new rate, which will hike the current cost from 8.359 cents to 10.728 cents per kilowatt, will mean an increase of $12.34 in the monthly bill of a homeowner using 500 kilowatt-hours.

The commission, at the urging of Commissioner Herbert DiSimone, who reasoned it would be unfair to seasonal businesses to spread the increase over a year, divided the commercial rate increase into two bites – an 18.99-percent increase between January and June, and a 7.63-percent decrease over the new higher rate from July to December. The full 24 percent is being passed on to industrial users, but as PUC spokesman Thomas Kogut pointed out, most industrial users have contracts with suppliers and don’t use the standard rate offer provided by National Grid.

It was the commission’s inability to do anything but grant an increase to cover the higher cost of electricity that had Diaz and Lancia conferring. Both would like to see changes.

Diaz believes the three-member commission should include minority representation and possibly be expanded to five members. She also feels that legislators should have a say in rate increases. Such action would require legislative changes, and both were considering how best to do that.

Diaz said she would be conferring with the House leadership.

“I’m willing to discuss all legislative proposals with my members, including increasing the number of members of the PUC,” Mattiello said. “However, the cause of the rate hike is the increased cost of natural gas. As outrageous as the rate hike is, it is not the fault of National Grid or the PUC – it’s the lack of an appropriate energy policy for the entire Northeast region, which we must all work to rectify.”

Mattiello called for the state to tackle higher electric rates at its “root cause” – the lack of natural gas capacity.

He said he is working with the Office of Energy Resources, National Grid, and neighboring states to increase natural gas capacity for the state. He said he would be meeting the Massachusetts Speaker in January “to discuss this critical issue.”

At times last Tuesday, the audience – and in particular Jon Schermerhorn, who describes himself as a “very poor filmmaker” – were the center of the show as TV crews turned their cameras on them.

“You have to look me in the eyes when you screw me today,” Schermerhorn yelled. His comment was followed by shouts of “shame, shame” and the chant, “tell the whole wide world this is people territory and the people know the story.”

When commission members countered they were following the law, Schermerhorn yelled for them to change the law. And when told that National Grid is simply passing on the cost of electricity and if not refunded they would face losses, the audience yelled they could afford it.

Commissioner Paul Roberti suggested National Grid could even go bankrupt, to which Schermerhorn shouted “yea.”

How National Grid will pay for the increase, now that the commission has spread it over 12 months, was not clear at the end of the meeting. National Grid spokesman David Graves couldn’t say how the decision would affect the company’s cash flow. He observed that traditionally, the cost of electricity declines during the summer months, and that that could affect rates. But, on the other hand, he said there’s no knowing, and costs could go up when the company enters the market again.

The higher costs have been pegged to the supply of natural gas used to generate more than 40 percent of the electricity used in New England. While natural gas is plentiful, getting it to New England states is the issue. The pipeline capacity is such that in order to meet the heating demands of homes and businesses, which take priority during the winter months, generating plants switch to oil that is more costly.

In her opening remarks, Commission Chair Margaret Curran said the matter before the commission “is a very narrow issue” regulated by state statute. She said the company is “entitled to recover” its cost of electricity and it “is nothing more than just the cost of power.”

Yet, she added, Rhode Islanders “still face serious economic issues,” and for that reason the commission would consider means to reduce the impact of the more than 24 percent increase.

Knowing that it would be a raucous session, staff at the commission inquired whether it would be advisable to have police at the meeting. According to Kogut, Curran chose not to have law enforcement in attendance.

Comments

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  • RoyDempsey

    I am not sure why minority representation is important, but Mattiello's approach and focus seems right on target.

    Tuesday, December 30, 2014 Report this

  • MadInWarwick

    In the winter they switch to more expensive oil? Oil dropped from $150 a barrel to $52 a barrel this year so the cost hike seems a bit high. I get we have a scare supply of natural gas since nobody wants an LNG terminal in their back yard which is the root of the issue.

    Friday, January 2, 2015 Report this

  • rienergy

    Most people don't realize that they have choices with Electricity suppliers in RI. Just like you shop for the least expensive gas station, you can shop for the least expensive electric rate. I'd like to help you switch your provider - you can save 2.5 cents per kilowatt hour - which adds up quickly. visit my website or call me with your questions - I'm here in warwick, and NO, there is NO catch. It's free, seamless, legal, and doesn't involve any installation or construction to your home :)

    visit: www.rienergyconsultant.com or call 401-352-6938.

    Monday, January 5, 2015 Report this