In a recent commentary, Rhode Island Energy President Greg Cornett calls for “a more honest conversation about why electricity costs what it does.”
This is a laudable goal, but any honest conversation about rising energy bills must include utilities’ profits, a topic strikingly absent from his piece. The word “profit” appears only once, to reassure readers that Rhode Island Energy does not mark up the electricity they purchase for customers.
Make no mistake: There is profit being made.
Rhode Island Energy’s parent company, PPL, has a current market capitalization of over $26 billion. Total compensation for its CEO, Vincent Sorgi, was over $11 million in the 2025 fiscal year. And its most recent 12-month reporting period shows a 22.68 percent increase in net income to over $1.2 billion.
So how does Rhode Island Energy make a profit?
In Rhode Island, utilities like Rhode Island Energy earn their profits through the delivery of electricity, earning a rate of return based on what they spend building infrastructure. Rhode Island Energy is currently allowed to earn a 9.275 percent return on equity on the distribution of gas and electricity, though they are currently requesting a raise to 10.75 percent.
This brings me to one point in the commentary that I strongly agree with: utilities should be accountable for operating efficiently. The problem is that without thoughtfully designed public policy, they have no incentive to do so.
Since capital spending on infrastructure is how they make a profit for their shareholders, their incentive is to spend more, regardless of efficiency.
In fact, as publicly traded corporations, it is their responsibility to their shareholders to spend as much as possible on infrastructure to boost their profits, profits that come directly out of Rhode Island customers’ pockets. After all, 9.275 percent of $300 million is a lot more than 9.275 percent of $150 million.
Utilities are regulated monopolies that provide an essential service to customers. They need to earn a high enough shareholder return to attract the equity financing necessary to fund energy infrastructure, but these profits should not be so high that they harm the ratepayers the utilities serve.
Our current regulatory framework has failed to maintain this delicate balance. Since PPL fully took ownership of Rhode Island Energy, the average capital spending request has increased by over 47 percent, though not all of those requests have been approved by the state Public Utilities Commission. Our public policy encourages this: When utilities earn a fixed profit margin on what they spend, their incentive is to spend more.
This incentive is also harmful to the efficiency and effectiveness of our energy grid. Rhode Island has aging energy infrastructure that is driving up costs and needs replacement. New grid-enhancing technologies and utilization techniques mean that we can build a new grid that is more efficient, more reliable, safer and cheaper than the one we have now.
But that’s not in the interest of utilities when they get paid based on the cost of infrastructure. Their incentive is to build a bigger, more costly system, stifling innovation and saddling ratepayers with the cost of maintaining an inefficient and overbuilt system for decades to come.
The incentives need to change, or we will keep seeing the same results. Over the last two sessions I’ve introduced legislation to cap the increase of these capital improvement plans at 3 percent of the average of the previous three years.
Passing this bill would give our utilities a new incentive: to use their capital spending in the most efficient way possible.
Utilities should think prudently about how they can most efficiently spend on infrastructure, rather than treating their customers as convenient piggy banks when they want to boost shareholder profits. As legislators, we have the power to make this happen by changing our utility policy to better align the incentives of utilities with the needs of the public.
Rhode Island Energy would much rather point the finger at the transition to renewable energy sources for rising energy bills.
But as New England’s dependence on natural gas continues to drive up our electrical bills, local renewables could save us hundreds of millions of dollars a year compared to our current energy mix.
Slowing that transition would mean prolonging our dependence on an expensive energy source that we do not control, one subject to the whims of warmongering in the Middle East and global supply shortages.
New England faces many structural challenges that contribute to our high energy bills. Many will take years to solve, and some of them are beyond our power entirely. But one thing we can do now is to change our public policy to make our utilities prioritize efficiency over quantity.
Until we align the interests of our utilities with our ratepayers, we won’t be able to seriously address energy affordability in Rhode Island, for this generation or the next.
Senator Dawn Euer represents District 13 in Newport and Jamestown in the Rhode Island Senate.