How do we upgrade our electric grid to accommodate more renewables and reduce greenhouse gas emissions while ensuring affordability for all customers? This is a question PP&L and others in the energy community have been tackling through the ongoing electric and gas rate case proceedings at the Public Utilities Commission. In 2017 National Grid submitted a proposal to the Public Utilities Commission to increase gas and electric rates to maintain service reliability and upgrade the system. And now after several months, it appears that a consensus has been reached.
We reflected on this case in a previous blog, and now that a settlement has been reached, here are the quick settlement takeaways:
- The proposal is a Multi-Year Rate proposal, meaning it sets rates for three years. There is a slight increase for rates, but it is significantly less than National Grid’s original proposal.
- There are indeed components to enable and expand a modern grid, electric vehicles, advanced meters, clean technologies such as heat pumps or battery storage, and clean energy sources.
- PP&L worked tirelessly with our co-intervenors, the Sierra Club and NRDC, to evaluate the proposed settlement. We are confident that this will benefit Rhode Island ratepayers.
- The settlement was among stakeholders such as National Grid, PP&L, state agencies and many others, but it is non-binding. The Public Utilities Commission has the final say and will review the settlement in the next few weeks.
New Rhode Island Rates
In the settlement agreed to by the intervening parties, National Grid would increase its operating revenue by $31.4 million or 11.2 percent over the next three years for electricity. On the gas side, Grid’s operating revenue would increase $16.8 million or 3.3 percent of the three year period. The Multi-Year Rate Plan for both gas and electric sets clear revenue requirements for National Grid each year with moderate increases each year.
Originally, National Grid proposed a $41.3 million increase for electric and $30.3 million for gas to recover costs. Following the change in federal tax law and negotiating by the Division of Public Utilities and other intervenors, the application was significantly amended to better reflect costs and savings. The Return on Equity (ROE) was also greatly reduced in the settlement process from Grid’s original proposal of 10.1% ROE to 9.275% ROE. This ROE is on the low side for utilities in New England. Details on settlement changes can be found here.
The average electricity consumer who uses 500 kWh per month will see rate increases of 4.1% increase ($4.27) in the first year and less than 1% in each of the following two years. A typical customer who uses annually 845 therms of gas would see an initial decrease in year one by $2.01 but an increase of $18.13 in year two. More details on bill impacts can be found on the public notice here.
Low-income customers will see their bills go down. They will have a total bill discount of 25% with an additional adder of 5% discount for customers with a greater financial need who participate in certain prescribed programs.
Overall, on the issue of how much National Grid should get paid for providing electricity and gas distribution services, PP&L reviewed the proposal for the new rates for all residential customers and can confirm the proposal is reasonable and improved since the original filing. The state’s ratepayer advocates at the Division of Public Utilities did an excellent job scrutinizing the numbers. All ratepayers will benefit from the system investments and integration of clean energy sources in the Power Sector Transformation (PST) portion of the settlement.
Settlement a Win for Green Energy
The PST components of the settlement will help Rhode Island reach our greenhouse gas reduction goals and align energy system investments with state climate change policies. PP&L is especially pleased about the various efforts to integrate more clean energy and help consumers realize new benefits.
Electric Transportation: The Electric Transportation section of the proposal serves to advance the electric vehicle (EV) market. And that is important for three reasons:
- Emissions from transportation are now greater than emissions from electricity.
- Studies show that Rhode Island’s economy improves when we power cars from electricity and switch off gasoline and diesel.
- All ratepayers benefit, even those who do not have EVs, when EV drivers charge their cars during off-peak hours.
The EV effort is broken into various components; we are especially excited about the pilot that rewards customers with a rebate for charging their EV off-peak. Likewise, the expected development of many more EV Level 2 charging stations and some fast charging stations will greatly boost EV driver confidence and charging accessibility.
DC Fast Charging Station in Chicopee, Mass.
Working with the Sierra Club and NRDC, we were successful in advocating for special attention for charging stations that can serve RIPTA buses, multi-unit housing complexes, and low-income neighborhoods. This ensures that EV infrastructure is developed equitably.
Proterra Electric Bus
Storage: Electricity storage technology has improved greatly in recent years and costs have come down dramatically. The settlement will allow a couple of pilot projects to be built. We would have liked to have seen a more ambitious effort, but this is a stepping stone. We are pleased that one idea that we put forward was accepted: One of the storage projects will be coupled with a fast charging station for electric vehicles, so that the station itself will be able to operate economically during periods of high electricity demand.
Heat Pumps: The amended settlement includes additional funds to incentivize customer owned electric heat pumps. Heat pumps are highly efficient and can garner significant financial savings in homes heated with oil, propane, or electric resistance heat. Heat pumps yield environmental benefits too, especially when powered by a cleaner electric supply. Funding from the settlement will supplement existing programs in the state’s efficiency program.
Heat Pumps Powered by Solar, courtesy of Revsion Energy
Grid Modernization: An advisory group will be created to help develop a thorough Grid Modernization Plan (GMP). This inclusion of local experts and concerned stakeholders will advance Rhode Island’s clean energy goals while balancing cost concerns for customers and the system. The GMP will assess potential technologies and strategies over the next 5+ years to consider how grid modernization may be included in future rate cases, infrastructure planning, or other investment planning processes.
In concert with the GMP, National Grid will commence work to cultivate its advanced metering functionality (AMF) business case to better understand potential AMF investments, how to manage data access, coordinate with third-party providers, and more.
The Public Utilities Commission will here expert testimony on this case between June 14 and June 29th. These hearings are open to the public and will be livestreamed and recorded. Morning sessions begin at 9:30 and all session end around 3:15. PP&L will cover the hearings, but here are some dates our members and colleagues may be interested in:
- June 14: Power Sector Transformation Overview
- June 15: Performance Incentive Mechanisms
- June 18: Grid Modernization, Advanced Metering Functionality, Electric Vehicles
- June 19: Electric Heat, Storage
Full hearing details can be found here.
If the settlement is indeed approved by the Public Utilities Commission, the new rates will go into effect on September 1, 2018.
Add Your Voice!
The final public comment hearing will provide an opportunity for you to add your voice to this important proceeding:
Tuesday, June 19th 5:30 pm
Community College of RI (CCRI) Liston Campus Auditorium
1 Hilton Street, Providence, RI
Written comments may also be submitted to the Public Utilities Commission Clerk Luly Massaro, if you are unable to make the in-person public comment session by emailing Luly.Massaro@puc.ri.gov.
This settlement represents many months of analysis, negotiations, and prudent compromise among consumer advocates, energy experts, the utility (National Grid), state agencies (OER, the Division), and other stakeholders. PP&L and other intervening settling parties are united in our support of this proposal. If you would like to learn more, please email Kat Burnham at email@example.com.