Ratepayers tell the PUC to reject RI Energy’s rate increaseMore needs to be done by thePUC and RI Energy to mitigate the proposed utility rate increases effect on low-income and working class Rhode Islanders, said advocates.
Published on September 17, 2022
By Steve Ahlquist
Over 50 people, including organizers, activists, elected officials and ratepayers gathered at the Public Utilities Commission (PUC) in Warwick on Friday morning to call for Rhode Island Energy to do more to mitigate a hefty increase in electric rates, estimated to be about $52 a month on average and proposed for the winter months when energy prices are expected to soar.
In testimony after testimony people spoke about how an increase in utility rates will compound existing problems of inflation, the housing crisis, and rising inequality, which will force people into homelessness, children into the hands of DCYF, and the state towards an economic crisis. Among the social justice groups represented were AMOR, the People’s Port Authority, Sista Fire, SAGE, and the George Wiley Center.
The testimony provided can be divided into two major categories: The moral case for avoiding a massive utility price increase, and the practical case for how to mitigate the price increase through the actions of either the PUC or RI Energy themselves.
To understand the proposed price increase, it’s important to understand that RI Energy does not make any money on the electricity or gas the company provides to ratepayers. Instead, under the law, the company provides these commodities at exactly the price they pay for it. This pass-through cost is always set at the price RI Energy paid for it.
The way RI Energy makes its money is though the distribution side of the bill. This is done during a PUC rate case by adding up all the infrastructure the company owns to deliver the commodity: Think of gas pipes, compressor stations, wires, electrical substations, trucks and more, and allowing the company to claim a profit on that infrastructure, known as a “return on equity” or ROE.
That profit margin is set by the PUC every three to eight years during a rate case, a complex process where the PUC ultimately calculates what the ROE should be. Currently the ROE is set at around 11%, but in the past it’s been as low as 6%.
The PUC has no power over the commodity side of the bill, it’s a straight pass-through, said Jerry Elmer, former Senior Attorney at CLF, who literally wrote the book on how utility rates work and helped Uprise RI to understand the complexities of utility billing. Elmer’s work was central to defeating Invenergy‘s proposed $1b fracked gas and diesel oil burning power plant aimed at the pristine forests of northern Rhode Island.
“Where the PUC can control things is on the distribution side of the bill,” notes Elmer. “The PUC can say, ‘We only want the utility, RI Energy, to get a ROE, return on equity, of six percent instead of ten percent,’ for instance, and give that difference back to ratepayers. Everything the George Wiley Center is talking about this time is within the power of the PUC to do.”
The George Wiley Center is a “grassroots agency that organizes members of the low-income community to advocate for systematic changes aimed at alleviating problems associated with poverty.” They are asking for the following four concessions to avoid or better mitigate the proposed rate increase:
- The PUC must decrease the profit margin of utility companies, from 10% back to 6%;
- Rhode Island Energy should voluntarily set their profit margin at lower levels, instead of what the PUC allows;
- Rhode Island Energy must commit to working to pass a Percentage Income Payment Plan (PIPP); and,
- Rhode Island Energy must share the burden of increasing electricity and natural gas market costs by absorbing some of the increased costs and by withdrawing their current rate hike proposals.
There is some relief coming to Rhode Islanders by way of Rhode Island Attorney General Peter Neronha‘s office. 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 secured $200 million for Rhode Island ratepayers along with mandated steps toward meeting Act on Climate goals.
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“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,” notes the Attorney General in a press release.
Rhode Island Governor Daniel McKee was the first person to testify before the PUC on Friday morning. Governor McKee’s recommendations to the PUC were more moderate than those proposed by the George Wiley Center and less likely to mitigate the full force of the utility increases, even as he said that “every possible option should be covered here.”
Governor McKee suggested using $3.8 million dollars 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 include 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.” This will lower utility bills by about $14-17 a month for low income ratepayers.
Governor McKee is also working to get LIHEAP dollars into Rhode Island early, and working to increase the amount of LIHEAP dollars the state will get from the federal government. The Low Income Home Energy Assistance Program (LIHEAP) provides federally funded assistance to reduce the costs associated with home energy bills, energy crises, weatherization, and minor energy-related home repairs. The Governor believes this will bring about $450 in savings to those low-income ratepayers who qualify.
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,” notes the Attorney General’s office in a press release.
The Governor also suggested moderating the hit customers are facing by spreading the increased cost over 12 months. This could backfire when in the hot summer months ratepayers are using electric fans and air conditioners to beat the heat.
Governor Daniel McKee:
Though the steps proposed by the Governor and the Attorney General will help mitigate some of the effects on some low-income utility consumers, they will not be enough to avoid leaving thousands of Rhode Islanders to face higher costs and potential economic disaster.
Representative David Morales (Democrat, District 7, Providence) was more direct in his opposition to the rate hikes in his testimony. He asked that the PUC mark the case as “extraordinary” and to reject the rate increase outright. Representative Morales argued the moral and economic case for keeping the rates lower. A rate increase, noted Morales, will lead to utility shut-offs and homelessness. People will land in further economic debt, “a vicious cycle where they will never be in a situation where their utility debt is cleared.”
“While I understand that we are continuously citing some of the existing programs that exist for the purpose of providing consumers relief, they are not adequate by any stretch of the imagination,” said Morales. “And I say that because the eligibility to qualify as a low-income utility customer are very stringent, it is essentially 60% of the area median income. Therefore if you are an individual earning 70% of the area median income, if you are a working family of four, earning $70,000, you do not qualify for any of these programs…
“We are not going to see actual relief for working people… that is why I am calling on RI Energy to absorb some of the costs of the increasing energy prices that we are seeing… The root of the issue is addressing the corporate greed that lies within having a profit driven utilities system.”
George Wiley Center organizer Camillo Viveiros was the last to speak. (All other speakers are below).
“You have the money to eat this [rate increase,” said Viveiros to the RI Energy lawyers in the room. And to the members of the PUC, Viveiros was more blunt. “If you don’t feel you have the legal, administrative authority to do the right thing, then you should resign… At the George Wiley Center our entire budget is less than any one of your are paid, and we’re the ones who will have to deal with people coming in facing shut-offs, people shut-off already because they don’t know their rights.
“It is an insult to hear that the Governor’s proposal of $50 is enough. It is an insult to say LIHEAP is sufficient… It’s not sufficient for a lot of middle class and working class people. It isn’t sufficient for low-income people. It isn’t sufficient for undocumented people.”
After the public comment portion of the hearing the PUC took up the legal case presented by the lawyers. You can watch the first part of the hearing here, beginning at the 1 hour 55 minute and the second part here.
The hearing will continue at 9:30am on Monday, September 19. A vote on the proposed rate increase has yet to be scheduled as of this writing.
Below is all the testimony presented by those in attendance who opposed the rate increase.
Reverend Donnie Anderson:
Senator Kendra Anderson (Democrat, District 31, Warwick, Cranston):
Representative Scott Slater (Democrat, District 10, Providence):
Representative-elect Cherie Cruz (Democrat, District 58, Pawtucket):
Sister Mary Pendergast:
Dr. Marie Hennedy
Dr. Nithin Paul:
Pawtucket City Councilmember Clovis Gregor:
Senator Cynthia Mendes (Democrat, District 18, East Providence):
Dr. Luis Daniel Muñoz: