Senate
passes Sosnowski legislation to address high cost of energy in Rhode Island
STATE HOUSE – The Senate passed legislation
introduced by Sen. V. Susan Sosnowski (D-Dist. 37, South Kingstown, New
Shoreham) that would authorize the Public Utilities Commission to conduct a
more comprehensive review when determining a utility’s profit by allowing the
agency to consider the existence of other remuneration.
The bill (2015
S-0409A), which passed the Senate 37 to 0, now heads to the House of
Representatives for consideration.
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.
