PROVIDENCE — When the General Assembly approved language that would allow the state to put administration of its energy efficiency programs out to bid, advocates had been hopeful.

By statute, Rhode Island’s designated gas and electric monopoly has administered the state’s suite of energy efficiency programs since their inception; first National Grid, then when Pennsylvania-based PPL Corp. bought the assets, Rhode Island Energy took over.

In 2023, lawmakers approved a proposal in the state budget from Gov. Dan McKee to put administration of those programs out to bid. The hope was to find cost savings and discover if another entity could do a better job.

But that process ended in a shaggy dog story last year, when state officials in the Office of Energy Resources (OER), the agency that was put in charge of the first three stages of the request for proposals (RFP), quietly ended the procurement process before the bids would have been handed to the Public Utilities Commission for a final decision.

In a decision memorandum dated Aug. 26, 2025, state officials chose to stick with Rhode Island Energy as the incumbent, citing “the added costs and risks (both quantified and unquantified) associated with the transition.”

There were only two vendors, including Rhode Island Energy, by the time OER pulled the plug. The other vendor was the Vermont Energy Investment Corporation (VEIC), a nonprofit based in Winooski dedicated to designing cheaper energy efficiency programs for governments and utility companies.

It was an abrupt stop for an RFP process that has been worked on by multiple parties for more than a year and a half since OER issued the RFP in early 2024.

VEIC’s bid came in about $5 million more than Rhode Island Energy’s, some $130 million to run the program. But VEIC also estimated it would be able to increase the benefits associated with the state’s energy efficiency programs by 32%, getting more mileage out of each dollar spent.

Emily Koo, state director for the Acadia Center, a longtime advocate of energy efficiency programs and an industry stakeholder, said the RFP process by OER was “disappointing.”

“It doesn’t put a great taste in your mouth for the state’s interest in actually pursuing a third-party administrator,” Koo told ecoRI News. “Their assessment was disappointingly status quo.”

Energy efficiency programs are designed to help ratepayers use less energy — the line in the industry is that the cheapest energy is the one that is never used — by weatherizing buildings, purchasing LED lighting, and providing free home energy audits and rebates for bigger appliances such as refrigerators and washing machines. Rhode Island’s programs are collected as charge items on monthly utility bills for gas and electric.

The estimated benefits with each program is how they measure their own efficiency. Benefits come from a wide swath of sources, including reduced energy costs for consumers, reduced strain on the electric grid and its infrastructure, and public health benefits from improved air quality and reduced greenhouse gas emissions. All of which, even if in tiny ways, can slowly decrease energy bills over time.

“It’s the most bang for your buck,” said Koo, explaining energy efficiency benefits. “Reducing your demand, so reducing energy consumption, so there’s actual savings on energy and it’s savings for the entire electric system, particularly because of less peak demand for electricity.”

Total current benefits for this year’s program stand at about $212.4 million: $90 million in electric benefits and another $121 million in non-electric benefits. For comparison, VEIC’s estimate of benefits in its bid would exceed $371 million, 16% higher than Rhode Island Energy’s estimated benefits.

But despite coming in with much higher benefits, and a higher program cost, OER officials, while calling VEIC’s bid “strong,” still sided with Rhode Island Energy. State officials wrote that transitioning from Rhode Island Energy to VEIC would cost an extra $1.8 million on top of its more expensive bid, over double what the nonprofit estimated its transition to its own run programs would cost, according to its proposal narrative.

“Though the VEIC proposal offered greater net benefits and a higher benefit cost ratio under the Rhode Island Test, these did not account for the total transitional costs borne by both the vendors and OER, the Public Utilities Commission (PUC), the Division of Public Utilities and Carriers (DPUC), or any other State entities that may seek to be parties to any transition dockets or processes,” according to OER’s Technical Review Committee.

“I would certainly put more emphasis on benefits per dollar,” Koo said. “The premise of least cost procurement is that you’re investing in energy efficiency that’s going to be less than the cost of supply.”

Slip in rankings

Rhode Island’s programs are usually ranked among the top of all states with energy efficiency programs. But the state has slipped down the rankings during the past decade.

In 2015, the American Council for an Energy-Efficient Economy (ACEE) ranked Rhode Island fourth nationally for its energy efficiency programs. In 2022, the year PPL bought National Grid’s assets, Rhode Island slipped to seventh place. Last year’s report showed more slippage, with the state’s energy efficiency ranked 12th nationwide.

The programs have come under fire in recent years due to the exploding energy cost crisis. Energy costs, for electricity and natural gas, have seen record rates since fall 2022, when state regulators at the Public Utilities Commission approved historic rate hikes for both utilities.

Their unpopularity politically can partially be explained by the fact most of the benefits and savings on energy from the programs are seen more in the long term, than the short term.

At the end of last year, Rhode Island Energy proposed cutting funding from the programs, which are sourced via specific line items on monthly utility bills, by $19 million for the electric side programs and a $2 million haircut for the gas energy efficiency programs.

The final, reduced program budget for 2026 approved by the PUC came at $95 million, but McKee in his budget this year proposed another reduction in the programs, capping their annual budgets firmly at $75 million.

In a lengthy statement emailed to ecoRI News, VEIC said it was “surprised” at OER’s abrupt decision to cancel the procurement process, noting that their budget proposal was developed without a defined budget for the agency. Instead, the company relied on the most recently approved program budget, written by Rhode Island Energy in 2024.

“We fully expected the process to move to the Public Utilities Commission for deeper evaluation given our compelling proposal to drive significantly more bill savings to Rhode Islanders,” Michael Haberman, a spokesperson for VEIC, wrote in a statement to ecoRI News.

OER didn’t respond to inquiries from ecoRI News.

Late word on decision

While OER officials made their decision in August, VEIC wouldn’t find out until November, when the agency chose to retract the RFP it had issued in March for the second phase of the procurement process. According to a bid protest written by VEIC’s attorney and submitted to the Division of Purchases on Dec. 5, VEIC didn’t receive confirmation until they protested to OER, after the RFP listed on Ocean State Procures was retracted and canceled on Nov. 5.

“Each time VEIC had inquired as to the status of the procurement during the overall procurement period, it was frequently informed that there was ‘no update to provide,’ and no update or additional information was provided after the date that VEIC is now aware that this memorandum had already been drafted,” Stephanie Phillips, general counsel for VEIC, wrote in a letter to the Rhode Island Department of Administration. “Nor, it should be mentioned, did VEIC receive any notification that the procurement had been terminated, and only upon VEIC’s inquiry after seeing the status publicly posted on Ocean State Procures did OER confirm that the procurement had been canceled, without any further information on the basis for this decision.

“In addition to stating reasons for the determination that do not appear consistent with the solicitation or the legislation that required it, the delay of time after this memo’s effective date suggests additional, undisclosed factors influenced this procurement’s eventual cancellation.”

VEIC would ultimately be unsuccessful in its bid to protest to the Division of Purchasing. Then-director of the Department of Administration Jonathan Womer sided with OER, agreeing with the Technical Review Committee’s focus on affordability, its concern about transition costs and challenges, a hostile federal government, and uncertain market risk for energy efficiency. He found the agency ran the procurement appropriately.

“There is no evidence of corruption, bad faith or anything that appears to rise to the level of palpable abuse of discretion by TEC,” Womer wrote in his decision. “To the contrary, it appears that the OER conducted a comprehensive, thoughtful review as described in its memorandum and has expressed concerns about transitioning to a new administrator at the present time.”

Behind the scenes, meanwhile, some officials on the Energy Efficiency Council (EEC), which acts as the state’s overseer of Rhode Island Energy’s administration of the programs, had their own concerns about the accountability of OER in the RFP process. The council had played only an advisory role in the process, with most of the decision-making power from the RFP remaining in OER’s own assembled committee.

Documents obtained by ecoRI News show that EEC members Peter Gill Case and Priscilla De La Cruz, who works as director of the Sustainability Department for the city of Providence, expressed concerns about the emphasis OER gave to transition costs and risks associated with a third-party administrator, writing “many of which were either speculative in nature and/or concerns that would have been known going into the procurement in the first place.”

In their letter dated Sept. 17 to the state purchasing officer, Case and De La Cruz argued they didn’t uncover any evidence in their review of the proposals that the transition process might be disruptive.

They also argued that the increased administrative costs cited by OER wouldn’t “clear that these costs would come at an incremental cost to ratepayers specifically.” OER also didn’t provide “any backup” into how they arrived at their estimates for transition and other associated costs.

“These costs were not included as part of our evaluation criteria, nor were they discussed with us until OER shared an initial draft of the Phase 3 memo,” Case and De La Cruz wrote.

“In many cases, however, these were not part of the formal evaluation criteria and should not have overridden the results of the procurement process which identified VEIC as the vendor that had the best technical capabilities and provided the greatest net benefits,” the EEC members noted. “We would have preferred that these concerns be addressed through a PUC docket, rather than to disqualify VEIC prematurely.”

In a memo released a week later responding to Case and De La Cruz’s letter, William Owen, a member of the OER Technical Review Committee and energy and policy regulatory manager for the agency, defended the committee’s recommendation to stick with Rhode Island Energy, writing that the current process was, “already a complex and intricate process.”

“The transition to a third-party administrator would add to the annual process several additional steps, including a contracting function between OER and a potential new administrator, a rate-based funding and payment cycle between the utility, the state, and the administrator, and a regulatory process that would need to test the jurisdictional thresholds,” Owen wrote.

At the end of its decision memo awarding the contract to Rhode Island’s utility monopoly, the Technical Review Committee wrote, “OER reserves the right to reissue an RFP for these services in the future at our discretion, which we will exercise if we determine the efficiency services are not sufficiently meeting the expectation and needs of our customers.”