PROVIDENCE — The Rhode Island Superior Court Monday cleared the way for PPL Corporation to acquire The Narragansett Electric Company from National Grid USA following a settlement agreement between PPL Corp. and the Rhode Island attorney general’s office.
The court issued orders that were directly related to the attorney general’s appeal of an earlier order from the Rhode island Division of Public Utilities and Carriers approving the acquisition and lifted the court’s stay of the approval order. The decision enables PPL and National Grid to close their deal.
As part of the agreement, PPL has agreed to provide $50 million in bill credit to Narragansett Electric customers (both gas and electric), seek Rhode Island Public Utility Commission (RIPUC) approval to forgive more than $43 million in unpaid bills for low-income and protected customers, and write off and not seek recovery of more than $20 million in current regulatory assets on Narragansett Electric’s books.
PPL will not seek any base rate increases for “at least three years” after the transaction closes and until there has been “at least 12 months of operating experience under PPL leadership.”
The settlement also requires PPL to forgo the potential “recovery of transition costs associated with the acquisition and integration of Narragansett Electric, which PPL had already capped in its prior commitments.”
These orders equate to more than $200 million to the state from the company, Attorney General Peter Neronha said. The attorney general said these requirements can be held up in court.
Ryan Hill, a spokesman for PPL, said the company expects to complete the acquisition this week.
On Feb. 23, state regulators approved the transfer of the Narragansett Electric Company — National Grid’s electric and gas business for customers in Rhode Island — to PPL Corporation. The very next day, the attorney general filed a motion to appeal the decision.
Neronha said the transaction allows PPL to have an energy “monopoly” in Rhode Island, and the time to set expectations is “now,” not after the deal has already gone through.
At the time, the proposed transaction, according to the attorney general’s office, would have “enormous consequences for all Rhode Islanders.” Neronha’s office filed a motion in Rhode Island Superior Court to appeal and stay the decision by the Division of Public Utilities and Carriers.
In the court filings, Neronha’s office said it appealed the decision on the grounds it does not sufficiently provide assurances that the sale is in the best interests of Rhode Islanders, including whether the sale would result in degradation of services or significant rate increases.
Neronha also questioned if Philadelphia-based PPL would be capable of creating an effective storm response and provide necessary IT services without increasing costs to ratepayers. He said in his court filings he would like to see if PPL can effectively work with the state to meet emissions and other goals required by the Act on Climate.
Neronha said the state’s decision did not consider whether PPL had a viable post-transaction financial plan as one was not submitted. It came after experts in his office raised questions about the sale months prior. But the Division of Public Utilities and Carriers said “after a thorough examination of the record,” including many public comments, the evidence shows “that the facilities for furnishing service to the public will not thereby be diminished” by approving the transaction.
On Monday, PPL announced it agreed to submit an Act on Climate Report within one year of the acquisition to the RIPUC and attorney general’s office.
“In government, we have this tendency to have everything right here in front of us... Act on Climate needs us to think about the future, but to act now,” Neronha said.
PPL will also make a $2.5 million contribution to the Rhode Island Commerce Corporation’s Renewable Energy Fund. The company will also make an additional $2.5 million available to Neronha’s office to use as “the office deems necessary.”
“We have said throughout the approval process that PPL would bring clear value to Rhode Island, and the additional commitments announced today will provide direct and indirect benefits to customers that we believe will form the basis of a constructive and long-lasting presence in the state,” Vince Sorgi, PPL’s president and chief executive officer, said in a statement. “At the same time, the acquisition will provide PPL with a more diversified portfolio of assets, reduce the proportion of revenues derived from coal generation as part of our business mix, and create additional opportunities to invest in a sustainable energy future.”
Narragansett Electric has 486,000 electric customers and 257,000 natural gas customers in Rhode Island.