WARWICK, R.I. — Tighten your budgets, Rhode Islanders, because your electric bills are expected to climb to the same, unprecedented cost as last winter.
On Tuesday, state officials approved a pricing proposal from Rhode Island Energy, the state’s dominant electric utility, to raise electric bills by 24 percent this winter. The rate hikes take effect on Oct. 1 and will continue through March 31, 2024.
The increase for a typical customer who uses approximately 500 kilowatt hours of electricity monthly is about $32 per month.
“We’re very troubled by the size of the increase,” admitted Ron Gerwatowski, the chair of the Rhode Island Division of Public Utilities Commission, during Tuesday’s meeting. But Gerwatowski explained that the PUC “does not have the authority” to force the company to absorb the costs.
Rhode Island Energy, which is owned by Pennsylvania-based PPL Corp., does not actually make a profit from supplying energy to its customers. If state regulators were to deny Rhode Island Energy’s request to increase rates, the company would have to absorb a $114 million loss, company representatives said during a commission meeting on Sept. 20.
The company delivers electricity to customers, but it does not own the power plants where that electricity is generated. The supplier chosen by Rhode Island Energy is called Last Resort Service, or LRS. About 70 percent of the utility company’s residential customers in Rhode Island rely on LRS rates, which are charged to customers at cost, with no profit to Rhode Island Energy.
Rhode Island Energy has to secure enough electricity to power homes and businesses through a competitive energy auction. The auction occurs months in advance of the new rates taking effect, company officials explained in front of the commission Sept. 20.
These price adjustments, which occur twice a year, do not impact customers who are part of a community aggregation plan or use an alternate supplier. Only about 30 percent of Rhode Island Energy’s residential customer are part of a community aggregation plan.
Also on Tuesday, Governor Dan McKee and the Office of Energy Resources announced they are taking action to provide relief on the heating costs, which include $3 million in funding for direct rate relief to low-income Rhode Island residents. Additionally, there will be a freeze on the utility gross receipts tax collected on all residential and small businesses utility bills from December through March.
“We know that any increase in electric rates will impact all Rhode Islanders, said McKee in a statement sent by his office. “We’re committed to continue funding ways to lower costs for residents across our state.”
Since Rhode Island Energy’s proposal was filed with the state in July, numerous residents and elected leaders have spoken out against the price hikes.
State Representative David Morales, a Providence Democrat, testified in front of state regulators earlier this month, and said the rate hikes “have hurt thousands of Rhode Islanders who have now fallen behind on their utility bills” and are “now experiencing debt.”
“Some have even been on the verge of having their services cut off,” said Morales.
One Rhode Islander by the name of Toni Rose wrote a letter to the commission, begging it to vote against the rate increases. She wrote, “If you don’t help regulate this company, who will?”
“My rent is increasing next month, student loan payments are due, and now RI Energy wants to raise rates yet again,” added Rose in her letter, which was obtained by the Globe. “Come on, can the average working person catch a break?”
The company said it plans to decrease its “customer charge” fee starting in October, from $12 per month to $6.
In 2022, the Rhode Island Division of Public Utilities Commission approved an unprecedented 47 percent electric rate hike proposed by the utility company. Customers saw a slight reprieve in April when costs came down by 24 percent for the summer months, but the cost per kilowatt hour was unusually high for the warm weather period. By increasing rates by another 24 percent in October, rates this winter are expected to reach the same level as October 2022.
Dave Bonenberger, president of Rhode Island Energy, has pointed to “several ongoing market conditions” that are contributing to rate hikes, including the continued higher natural gas price worldwide and other global economic events. In 2022, Bonenberger pointed to a global supply shortage that was worsened by Russia’s invasion of Ukraine, when greater demand for liquified natural gas in Europe and Asia also had an impact on prices throughout the United States.
These winter prices are expected to come back down in April 2024, but it’s not yet clear by how much.