Dive Brief:
- Rhode Island regulators on Friday signed off on a settlement allowing National Grid to raise residential rates by 3.5% while investing in a range of modernization and grid transformation initiatives to enable more clean energy benefits.
- The settlement allows National Grid to launch electric vehicle and energy storage programs, creates a performance incentive mechanism to encourage efficiency, and establishes a stakeholder process around advanced metering infrastructure (AMI).
- The settlement had support from a wide range of stakeholders including clean energy and customer advocates. Among the benefits, income-qualified gas and electric customers' discounts will be doubled. Meanwhile, commercial and industrial electric customers will pay more.
Dive Insight:
States are increasingly focused on efforts to transform the power sector, but regulators need to strike a delicate balance to ensure that customers are not over-burdened by costly grid modernization investments.
The agreement puts Rhode Island "into a leadership role among New England states seeking to reform utility regulations," according to a statement from Daniel Sosland, president of the Acadia Center.
The final settlement represents a win for low-income customer advocates, most of whom will see a significant rate reduction. The current discount for income-eligible customers will be doubled to 25% of the total bill, with another 5% for customers who qualify through income restrictive federal assistance programs.
Overall, the settlement reduces National Grid's original one‐year base rate request by 75%, and lowered the company's allowed return‐on‐equity from the current 9.5% to 9.275%.
According to the PUC, the power sector transformation aspects of the approval include: investments in grid modernization; development of electric vehicle and energy storage programs; creation of a new performance incentive mechanism to encourage system efficiency and to increase measurement metrics; and establishment of an ongoing stakeholder process to continue development of proposals, particularly around AMI.
The Northeast Clean Energy Council and NECEC Institute issued a statement applauding approval of the agreement, calling it a "critical step" towards modernizing the state's electricity system. "The outcome of these cases will open new markets for clean energy solutions companies to deliver energy, economic, and environmental benefits to Rhode Islanders for years to come," the group said.
There were more than a dozen interveners, but the settlement had all of their support along with the Division of Public Utilities and Carriers, according to National Grid.
Other aspects of the agreement include returning all of the benefits of lower corporate tax rates to consumers over the three-year rate plan. In total, the settlement will increase National Grid’s electric distribution rates by 4.31%, and 2.74% for its gas business.
