Electricity Rates to Rise Again This Winter
Rhode Island Energy announces 24% hike in rates for season starting Oct. 1
August 7, 2023
WARWICK, R.I. — The state’s working poor are in for another winter of discontent.
Late last month Rhode Island Energy announced a 24% hike in the electric rates for the season starting Oct. 1. An average household using 500 kilowatt-hours a month can expect to pay an additional $32.29 on every bill after that date. Included in the rate hike is a $6 reduction in the customer charge for every bill.
Company officials said they expect the price of energy to decline again next April.
In a statement, Rhode Island Energy president Dave Bonenberger said prices were on par with last winter, as the company expected. He also praised state officials for suspending the gross earnings tax charge on customers’ bills starting this December.
“That will decrease bills a bit and we’ll continue to work with state leaders on other ways to help the most vulnerable,” Bonenberger said.
The rates will impact around 70% of state residents; the remaining 30% use alternative suppliers or are on community aggregation plans.
Per state law, the utility company, currently PPL-owned Rhode Island Energy, must buy its electrical supply six months in advance, locking ratepayers into a certain price. The six-month period is meant to provide ratepayers with a degree of stability in utility bills, but, as seen last year, can also lead to higher utility bills for half the year. Most of the electricity used in the state is generated from natural gas, which has higher global demand in the winter, causing rates to increase.
Rhode Island Energy can only charge whatever it pays its suppliers for the electricity, and can only charge ratepayers its pass-through costs — the utility makes most of its profit through the construction of new electrical and natural gas infrastructure. Activists have long demanded the utility company absorb the cost of higher energy and keep rates low.
It’s the second winter in a row ratepayers will have to cough up more to pay their bills. Last year state energy regulators — amid significant public outcry — approved a 46% hike in the electric rates, with the average home paying an additional $52 per utility bill.
Community organizations have long opposed any increase in the utility rates, repeatedly warning regulators that people unable to afford the new rate hikes could suffer because of shutoffs in their electricity or heat.
“The George Wiley Center is in opposition to the fall-rate increase proposed by Rhode Island Energy,” said Camillo Viveros, executive director of the Pawtucket-based George Wiley Center. “This year we need a freeze on rate hikes for low-income households, seniors on fixed incomes, and people with disabilities.”
Activists, including those from the George Wiley Center, have long asked the utility company, whether it was Rhode Island Energy or National Grid, to bring back a percentage-income payment plan (PIPP) for low-income residents. Instead of paying a flat rate tied to the number on the meter, low-income residents on PIPP would instead pay a percentage of their income, either 6% or 3%.
Like Benny’s or Almacs, PIPP is something Rhode Island used to have. The state crafted a pilot program in 1986, and an evaluation of the program performed by the Rhode Island Governor’s Office of Energy Assistance found a significant number of households participating in the pilot actually increased their payments for monthly utility bills. But the pilot expired without the Legislature implementing a permanent program.
Only three states, California, Ohio, and Illinois, have active PIPP programs.
Rep. Scott Slater, D-Providence, introduced a PIPP bill (H5847) earlier this year, but the legislation never made it out of committee in either chamber. During its hearing, activists told lawmakers that more people default on the utility company’s arrearage program than complete it, leading to a vicious cycle of poverty, misery, and debt.
“PIPP would provide fairer payment plans and help vulnerable utility consumers this winter by protecting them against the impact of Rhode Island Energy’s proposed rate hike,” Viveros said.
Rhode Island Energy did not oppose the PIPP legislation introduced this year, but told lawmakers it was open to filing a PIPP design with state regulators by July 1, 2024, after which a state Public Utilities Commission (PUC) review would start, ultimately delaying the intended impact of the bill by another two winter seasons. Slater’s bill as written would have become effective immediately.
The PUC has scheduled a public comment hearing on the rate hike for Wednesday, Sept. 13, at 6 p.m. Commissioners are scheduled to vote a week later, on Sept. 20 at 9:30 a.m.
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