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National Grid wants to Sell Its Rhode Island Business. Is that in the public interest?

A few months ago, news broke that National Grid planned to sell the Narragansett Electric and Gas Companies to a Pennsylvania-based company named PPL. In its deal with PPL, National Grid hopes to gain PPL’s business in the United Kingdom in exchange for Rhode Island’s electric and gas customers. However, this is not a done deal: over the coming year, Rhode Island regulators are charged with reviewing whether the sale is in the “public interest.” The Rhode Island Division of Public Utilities’ decision will have significant impacts not just on the two companies, but on consumers, state policy, and climate action.

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Almost all of Rhode Island’s natural gas and electric customers are currently served by National Grid, an investor-owned utility. Utility companies are what economists call a “natural monopoly” because it doesn’t make sense to have several companies running electric wires and gas pipes all over the place. Thus, the state allows National Grid to exclusively own all the electric and gas transmission and distribution infrastructure.  

And because the utility company is a monopoly, it’s subject to state regulation and oversight.  The Public Utilities Commission (PUC) approves rates and services on behalf of ratepayers.  And, per Rhode Island law, a different state agency called the Division of Public Utilities and Carriers (DPUC), has the authority to approve the proposed sale to PPL.  

Rhode Island utility law stipulates that the sale must be consistent with the public interest; past precedent has established that the sale must result in no net harm to the public.  Over the next few months, as the DPUC weighs National Grid’s petition to sell, it is crucial that the companies and the DPUC prove that the sale will not cause “net harm” to consumers and the environment.  

This petition comes at a moment when Rhode Island has passed binding emissions targets in Act on Climate and is seriously considering a statutory requirement of 100% renewable electricity by 2030. And as the electricity distributor, administrator of energy efficiency programs, and owner of the network of gas pipelines, the utility has a central role in our state’s transition to a low carbon future.

Green Energy Consumers Alliance will participate in this proceeding and do our best to represent the interests of consumers and the environment. Our immediate thoughts and questions about the deal include the following: 

  • What plans, if any, does PPL have to change electricity rates in the next few years if the sale were to go through? Furthermore, how does PPL plan to serve low-income consumers?
  • Will National Grid workers be treated with respect by PPL? Will PPL honor commitments to current workers? 
  • We have a new “Act on Climate” in Rhode Island that is legally binding. It requires greenhouse gas emissions to fall by 45% by 2030 and 80% by 2050 compared to 1990. Meeting this mandate will require a cleaner grid, as well as electrifying transportation. Running cars, buses, and trucks on electricity is good for an electric utility and good for consumers. How would PPL support and accelerate grid decarbonization and expanded electrification?
  • Heating emissions will have to fall too, and electrification offers a pathway away from fossil-fuel-based heating systems. A 21st-century electric utility stands to gain if people switch from oil and propane to high-efficiency heat pumps. That’s a natural fact. But it’s a different story for a gas utility. Is PPL prepared to accept the challenge of transitioning away from the gas business?  
  • Speaking of cleaning the grid, legislation has passed the State Senate to increase the state’s Renewable Energy Standard (RES) to 100% by 2030. We’re optimistic that it will be passed in the House. What plans does PPL have for complying with the 100% RES? Getting to 100% is achievable, but it’s going to require procuring a lot more offshore wind and solar. Offshore wind, in particular, cannot produce electricity by 2030 unless plans are put in motion very soon, and the utility will have a central role in going out to bid for new offshore wind projects. We believe that the sale is one of the main reasons why we haven’t seen further action on the 600 MW procurement announced by former Governor Raimondo last fall. 
  • Several communities in Rhode Island are adopting the electricity supply model we pioneered called “Green Municipal Aggregation” (GMA).  Sometimes called “community choice electricity,” GMA allows a city or town to choose an electricity supplier that offers a greener electricity mix than required by state law. Recently, the PUC approved aggregation plans for Barrington, Central Falls, Providence, and South Kingstown. Many more municipalities are on the way. Is PPL ready to accommodate aggregation? Aggregations do not compete with the utility, but the utility needs to cooperate for them to happen.
  • Is PPL prepared to administer Rhode Island’s nation-leading energy efficiency programs? For years, we have benefitted from National Grid’s experience running energy efficiency programs in Massachusetts, receiving research and best practices at no cost to Rhode Islanders. PPL will be new to the Least Cost Procurement model of energy efficiency, and they must be committed to investing in these programs as the first and best way to reduce energy costs.  
  • The energy system of the future will have a much cleaner electricity supply with more storage, more efficiency, and energy demand that is responsive to real-time changes in conditions. This means we need to modernize the grid, starting with advanced metering technology that allows for two-way communication with the utility. That’s how we “Shave the Peak” to reduce both costs and emissions.  What is PPL’s plan for investing in smart meters and other grid modernization technology?

To get to the heart of the matter will require a careful review by the DPUC, but we cannot afford to put on hold Act on Climate implementation and all the associated items mentioned above. We challenge National Grid, PPL, and state agencies to keep moving on key public processes—like the transition to 100% renewable energy, supported by another offshore wind RFP.  But if the process does indeed cause a delay in truly acting on the climate as called for by the law, then PPL must be ready with binding clean energy commitments to make up for lost time. Otherwise, there will be net harm to Rhode Islanders and that would be against the law. 

Green Energy Consumers and our friends will be watching and speaking out. This is a big deal for more than just the investors of National Grid and PPL—the future of Rhode Island’s energy system and climate goals are at stake.