Senate passes Sosnowski legislation to address high cost of energy in Rhode Island
STATE HOUSE — The Senate today passed legislation introduced by Sen. V. Susan Sosnowski (D-Dist. 37, South Kingstown, New Shoreham) that would authorize the Public Utilities Commission to consider factors that get to the cost of obtaining capital which may reduce rates.
The bill (2016-S 2675) now heads to the House of Representatives for consideration. The legislation provides that the existence of ratemaking mechanisms shall not be relied upon or cited by the public utilities commission for the purpose of making adjustments in determining an electric or gas distribution company’s cost of capital.
In 2014, these profits totaled almost $6 million as follows: National Grid received about $1.1 million in profit for administering gas efficiency programs; about $4 million in profit for administering electricity efficiency programs; and $876,602 in profit for long-term contracting and distributed generation.
“The bill also levels the regulatory playing field so that Rhode Island is similar to Massachusetts and Connecticut by allowing the PUC to consider all circumstances that may reduce a utility’s risk,” said Senator Sosnowski. “Risk is a factor the PUC considers when determining a utility’s profit. A lower risk translates into a lower profit.”
The bill will allow the PUC to consider electricity deregulation when examining National Grid’s cost of financing. This is the way it’s currently done in Connecticut and Massachusetts. In this regard, the bill levels the regulatory playing field among the three states.
Prior to deregulation, National Grid owned both the power plants that generated electricity and the transmission lines that distributed power to its customers.
Deregulation made two significant changes: National Grid no longer generates the electricity that it distributes to its ratepayers, and the company no longer shoulders the risks of financing the infrastructure needed to generate electricity.
Because of the latter change, National Grid may look to be less risky to investors, leading to a lower rate of return or profit which in turn may lower electricity rates.
For more information, contact:
Daniel Trafford, Publicist
State House Room 20
Providence, RI 02903