Rhode Island’s power needs will now be met by Rhode Island Energy, a division of PPLNational Grid plc announced yesterday that it has completed the sale of the Narragansett Electric Company (NECO) to PPL Rhode Island Holdings, LLC. Rhode Island Governor Daniel McKee held a press briefing introducing the new owners of Rhode Island’s electric grid to the state on Wednesday afternoon. The Narragansett Electric Company was immediately rebranded as Rhode Island Energy.
Published on May 26, 2022
By Steve Ahlquist
The sale is a transfer of ownership of 100 percent of the outstanding shares of common stock of NECO. NECO will continue to own and operate its assets and maintain all of its franchise rights for the provision of electric and gas distribution service in Rhode Island, under the management and control of PPL Rhode Island.
The sale was finalized after Attorney General Peter Neronha announced that in exchange for an agreement that secures $200 million in value for Rhode Island ratepayers along with mandated steps toward meeting Act on Climate goals, his office has withdrawn its objection to the Rhode Island Division of Public Utilities and Carriers‘ (DPUC) approval of the sale. The agreement provides benefits and protections for Rhode Islanders far exceeding the conditions imposed by the DPUC in its February 2022 decision approving the sale. You can read the settlement agreement here.
The agreement provides for $50 million in ratepayer credits, and $43.5 million in discharge of bill amounts for low-income and protected residential customers, the cost of which would likely also be borne by ratepayers. In addition to this direct ratepayer relief, the Attorney General has 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 PPL to seek this $103 million from ratepayers.
The Attorney General’s intersession has forced PPL, as the new owner of the state’s largest gas and electric utility, to take substantial steps in addition to those previously ordered to advance Rhode Island’s Act on Climate goals. In the proceedings before it and ultimately in its decision, the DPUC consistently refused to apply the Act on Climate to its review of the PPL/Narragansett Electric transaction.
At Governor Daniel McKee‘s PPL meet and greet press conference on Wednesday PPL CEO Vincent Sorgi spoke diplomatically of the Attorney General’s demands. “It’s part of the process when you do utility transactions,” said Sorgi. “We weren’t surprised that the Attorney General put forth the position that he did… We think the [DPUC] did an appropriate job on the order that they issued, but we are more than happy to age to th terms that we did with the Attorney General. [There’s a] lot of benefits for Rhode Island customers with a specific focus on low-income and special customers.”
“No job we do will be more important than delivering for our Rhode Island customers, and we’re pleased to have an experienced team comprised of PPL and former National Grid employees that is committed to providing exceptional service,” said Dave Bonenberger, president of Rhode Island Energy. Bonenberger recently moved to Warwick, Rhode Island where he will be in Senate Majority Leader Michael McCaffrey‘s district. Bonenberger could be heard telling Senator McCaffrey that he will be happy to put a lawn sign on his lawn in support of the Majority Leader’s re-election campaign.
Under its agreement with the Attorney General, PPL is required to contribute $2.5 million to the Rhode Island Renewable Energy Fund and up to $2.5 million to the Attorney General for retention of outside experts in anticipated Rhode Island energy proceedings that will directly impact Act on Climate Goals. Furthermore, in all future filings with RI utility regulators, PPL must include a written assessment of potential impacts on the Act on Climate’s requirements. In addition, PPL must hire a third-party consultant and establish a stakeholder process to create an Act on Climate report. This report is necessary to provide Rhode Islanders with specific and important information about next steps for climate efforts throughout the state, including energy efficiency program analysis and capacity for solar interconnection and distributed energy. The agreement also requires PPL to solidify other important investments in the infrastructure needed to meet climate goals.
The DPUC in its decision failed to take steps to ensure that the utility’ storm response not worsen under PPL ownership. The agreement the Attorney General has reached require that PPL ensure that Massachusetts-based storm response crews are contractually obligated to help Rhode Island first, before other states, in a storm event.
“This Office appealed the DPUC’s decision to the Superior Court because that decision failed to adequately protect and advance the interests of Rhode Islanders,” said Attorney General Neronha. “Up front, it applied the wrong legal standard in reviewing the proposed transaction, requiring a showing far less than what the law requires. In terms of substance, the DPUC would have allowed PPL to impose millions of dollars of transition and other costs on Rhode Islanders, who didn’t seek this transaction and already pay plenty of money for the energy they use. It missed an opportunity to return money to Rhode Islanders by failing to require PPL to provide entirely justifiable rate credits, which this agreement now includes. It failed to ensure adequate storm response given that PPL has its main base of operations significantly farther away than National Grid does. And it completely ignored a generational opportunity to address the state’s climate goals in the perhaps the most important context of all: how our energy is produced and delivered. Today’s agreement remedies all this.
“The time to address Rhode Island’s energy delivery system and climate future is now, in this context, not elsewhere and not later. Wherever and whenever necessary, this Office will continue to fight for Rhode Islanders. Because Rhode Islanders deserve no less.”
You can watch the Attorney General’s press conference here:
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As is standard practice in transactions of this nature, as the seller, National Grid will continue to provide some transition services to the Rhode Island business to maintain operational continuity. National Grid is committed to ensuring Rhode Island customers continue to enjoy the same standard of safe and reliable gas and electric service throughout the transition process as they have experienced under National Grid’s ownership.
“National Grid has taken enormous pride in being part of the Rhode Island community. In partnership with our customers, we have achieved so much – from nation-leading energy efficiency programs to the first offshore wind farm in the country,” said John Pettigrew, Chief Executive Officer, National Grid. “It has been a privilege to serve Rhode Island and I offer my heartfelt thanks to the many colleagues who have kept the lights on and gas flowing for our customers and communities every day.”
The LNG/liquefaction facility at Fields Point is owned by a different entity, National Grid LNG LLC, and was not included as part of the sale. The LNG/liquefaction facility will continue to be operated by National Grid LNG LLC. The approval of th liquefaction facility, over the objections of the local community, was plagued by bad faith actions on the part of, [former] Governor Gina Raimondo’s administration, National Grid, and the Coastal Resources Management Council. See: here, here, and here.