No date had been set as of early last week for the Rhode Island Public Utilities Commission to begin tackling a request that it look into both Blackstone Valley Electric Co. and Newport Electric Corp.’s rates.
The request came in the form of a joint petition from the Division of Public Utilities and Carriers and the state Attorney General’s office last month. For three years, both electric companies, which are owned by Eastern Utilities Associates, have exceeded the amount of profit they are allowed to earn under their regulatory agreements. In each instance, the companies have had to give consumers a credit on their electric bills.
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The petition suggests it is time the PUC recalculate the rates. According to a PUC clerk, the subject had not yet been placed on the commission’s schedule.
The hearing schedule, however, could be impacted by a rate consolidation plan that New England Electric System was expected to file by this coming Wednesday. NEES, which owns Narragansett Electric Co., is in the process of merging with EUA.
NEES filed a rate consolidation plan with the Massachusetts Department of Telecommunications and Energy on May 5, which proposed having all Eastern Edison (EUA’s subsidiary) and Massachusetts Electric (NEES’s subsidiary) customers pay the same rate. Massachusetts Electric customers now pay the lowest electricity rates in that state. The proposal also includes plans to extend a rate freeze originally set for Massachusetts Electric customers in March 1998.
The plan is expected to save Eastern Edison customers about $77 million over a four-year period, according to a company statement.
NEES’s statement also indicated company officials expected to file a rate consolidation plan in Rhode Island within two weeks. Narragansett Electric customers now pay a lower rate than Blackstone Valley and Newport customers, according to officials at the Division of Public Utilities.
The proposed merger of NEES and EUA received approval on April 30 from federal regulators, who reviewed the deal for possible anti-trust violations.
Rhode Island’s utility regulatory agency is broken into two parts: the commission, or PUC, which acts as a rule making body; and the division which acts as a consumer advocate and investigates cases where PUC rules may have been violated.
The Division hired consultant David J. Effron, of Ridgefield, Conn., to review the financial reports of both EUA companies for the 12 months ended February 1999. In a statement about his findings, Effron said both companies have been, and will continue to earn revenues in excess of their authorized levels.
For 1998, BVE was allowed an 11.43 percent annual rate of return on equity and its sister company, Newport Electric, was allowed an 11.4 percent rate of return, according to BVE spokesman Todd McLeish.
BVE, however, earned a 12.38 percent return rate in 1998 and must as a result rebate $299,872 to its customers, McLeish explained. Newport earned 13.32 percent and will be giving out customer credits totaling $437,711, he added. Those one-time credits were scheduled to appear on customer bills as of May 1 and will be labeled as “excess revenue credits.”
“It’s not like we’ve made too much and we’ve kept the extra,” McLeish said. “For the last couple of years we’ve had to have a credit to everybody’s bills.”
In May, BVE and Newport customers should also begin to see a drop in their electric rates as a result of EUA selling off its interests in power plants, McLeish added. As part of the region’s efforts to deregulate the electric industry, both Massachusetts and Rhode Island passed laws requiring local electric companies to divest ownership in power plants if they want to continue in the business of delivering electricity. That paves the way for other electricity suppliers to enter the market.
In a public meeting on April 28, the PUC approved the company’s plan to use savings from the plant sales to cut customer’s cost of buying electricity by roughly 7 percent.
