PUC approves 25% hike in winter electric rates despite protests

Despite warnings that a nearly 25% hike in winter electric rates would hurt financially struggling residents, state regulators approved Rhode Island Energy’s seasonal supply prices within minutes on Tuesday.

The Rhode Island Public Utilities Commission’s (PUC) 3-0 vote authorizes the state’s primary electricity supplier to increase rates for a six-month period starting Oct. 1. New 17.74 cents per kilowatt-hour rates translate to a $33.37 monthly bill increase for the average residential customer using 500 kilowatt-hours of electricity, marking a 24.9% hike over existing summer rates, according to updated calculations by Rhode Island Energy.

Community advocates, lawmakers and even the Rhode Island Office of the Attorney General urged utility regulators to consider how steep winter rate hikes – ever-so-slightly lower than winter 2022 – would worsen the financial plight of local residents already facing tough financial choices over basic needs like food and rent. But rates are determined by market forces like demand for natural gas and international conflict, making the PUC powerless to reject them based on customers’ financial situations.

PUC Chairman Ronald Gerwatowski referred back to state law, which mandates regulators approve the rate changes as long as the company can prove it bought the electricity at the lowest possible price, and doesn’t profit from the increase.

Rhode Island Energy executives have repeatedly pointed to economic forces – not the desire to pad their own pockets– as reasons why the winter rates have increased. Without the rate hike, the company stands to lose $114.45 million, or 38% of its yearly revenue, which could “significantly impact” its credit rating and borrowing ability, the company said in a supplemental filing to the commission,

“Depending on the Commission’s final order and rationale, the Company would explore all legal options, including but not limited to an unconstitutional taking,” the Sept. 19 filing stated. 

The Rhode Island Division of Public Utilities and Carriers in its independent review of the winter rates also concluded that the power company met the state regulations, recommending approval.

Not that regulators like it. Gerwatowski said Tuesday he was “very troubled” by the increase, warning that the same pattern of steep winter price hikes will resurface again next year, and for years to come.

“Until the region substantially reduces its reliance on natural gas generation, we are going to continue to see this cycle,” he said. “It’s an inescapable reality over the next three to five years, and potentially longer.”

Rep. David Morales, a Providence Democrat and outspoken critic of the rate hikes, also denounced the “egregious” rate hikes, urging the commission not to approve them in a Sept. 13 letter.

“With RI Energy’s growing revenues being worth billions of dollars, it is absurd for RI Energy to pretend these rate hikes are inevitable as it has become relatively clear that the company values their shareholders and profit more than their actual customers who DEPEND on utility services,” Morales wrote.

Rhode Island Special Assistant Attorney General Nicholas Vaz also warned that the rate hikes would create “heartbreaking decisions” for Rhode Islanders in prior testimony to the commission.

Meanwhile, advocates with the George Wiley Center, a Pawtucket social services agency, renewed their push for a state policy change that would cap the amount low-income ratepayers spend on gas and electricity.

Various iterations of the Percentage Income Payment Plan have surfaced in the state legislature through the years, including in the 2023 session, but failed to advance out of committee.

Households still get winter break

One bright spot for electricity customers: a four-month suspension in the state electricity tax that will begin Dec. 1, thanks to an allocation included in the state’s fiscal 2024 budget. For the average residential customer, the suspension shaves off 4%, or $6.70 a month, in electricity bills for each of the four months, according to calculations from Rhode Island Energy.

While the tax suspension applies to all Rhode Island Energy customers, 39,000 low-income residential customers will get an additional monthly discount from December to February thanks to an allocation of the state’s gas cap-and-trade revenue. The $3 million in credit in Regional Greenhouse Gas Initiative will save eligible customers $27.83 a month for each of those three months, according to Rhode Island Energy calculations. 

Customers in seven municipalities – Barrington, Central Falls, Narragansett, Newport, Portsmouth, Providence, and South Kingstown– can also opt out of the Rhode Island Energy prices, instead participating in a community aggregation plan that leverages bulk buying power to secure lower-priced electricity for its residents. Winter electricity prices through the Community Electricity Aggregation plan range from 17.43 cents per kilowatt-hour for the “basic” plan to 20.67 cents per kilowatt-hour for a plan that adds voluntarily renewable energy credits up to 100% of electricity used, according to new rates announced on Tuesday which take effect Nov. 1. About 30% of 780,0000 Rhode Island Energy customers already opt out of the company’s default electric prices.

Rhode Island Energy’s winter electricity rates start Oct. 1  and continue through March 31.