Critics say state funding for electric bills isn’t enough

CRITICS SAY THE STATE should provide more funding to offset the higher winter electric rates that will start on Oct. 1, including using some of its American Rescue Plan Act or general revenue fund dollars. Pictured is the R.I. Statehouse. / PBN FILE PHOTO/CASSIUS SHUMAN

PROVIDENCE – Faced with historic winter electric rate hikes, state officials stepped in with nearly $36 million in funding to soften the blow.

While the one-time credits will reduce ratepayers’ bills, with the greatest savings reserved for low-income residents, some say the state should do more to help, given its cash-rich coffers. 

“From an economic standpoint, this is a draconian increase,” said Gary Sasse, founding director of the Hassenfeld Institute for Public Leadership at Bryant University. “Every option should be on the table to minimize the impact of the enormous rate increases.” 

One of the most obvious options: the state’s $1.1 billion windfall of federal stimulus funds. Gov. Daniel J. McKee has already come up with a plan for how to spend the American Rescue Plan Act cash over the next five fiscal years, but that plan was hatched before Rhode Island Energy unveiled its eye-popping winter electric rates. 

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And while some of those funds have already been spent, more than half a billion is earmarked for future fiscal years, which means there’s still a chance to revisit how it’s spent, Sasse said.

Matthew Sheaff, a spokesperson for McKee’s office, did not directly answer questions about the governor’s interest in using ARPA money for ratepayer relief. Instead, he pointed to the governor’s existing recommendations, which included $32 million in bill credits from state settlement money over the sale of the utility business, $3.8 million in gas cap-and-trade revenue and a six-month suspension of the $6 monthly charge for residential customers. McKee in a statement on Sept. 23 also said he wants to suspend the state’s 4% tax on electricity bills through April, a measure that will be taken up at the start of the next legislative session.

Taken together, these measures wipe out most of the expected bill hikes for low-income customers. Rather than a $52 monthly increase in electric bills, the average low-income customer would see their bill go up between $3.83 and $6.04 per month for the next six months, said Todd Bianco, chief economic and policy analyst for the R.I. Public Utilities Commission. 

However, fewer than 40,000 residential customers meet the income qualifications to get this level of aid. For the other 400,000 residential electric customers, the state funding shaves off about $18 from the expected increase, so they can now expect their winter electric bills will be $34 more per month rather than $52, Bianco said.

Business and industrial customers see even less savings, especially since they use so much electricity.

“If you’re an industrial customer, you’re not even going to notice [the bill credits],” Bianco said.

That’s not fair, according to Rep. David Morales, D-Providence, whose impassioned pleas urging state utility regulators to reject the rate hikes had him escorted from the hearing room on Sept. 23.

Morales in an interview Monday said the state’s relief efforts were too narrowly concentrated on a small group of people, and would have a “minimal effect” for the working-class homeowners who didn’t meet those strict income guidelines.

Morales saw the ARPA windfall as a lost opportunity but wanted lawmakers to budget some of the expected surplus from the current fiscal year to set up a debt fund for people who fall behind on their payments – a phenomenon he expected to become increasingly common thanks to the rate hikes.

Sasse was also on board with using surplus general revenue to help shave off more from customers’ energy bills. The state ended fiscal year 2022 with a historic $900 million surplus. While that money has been allocated – and not on utility bills – initial estimates from the first month of fiscal 2023 show revenue is also about $12.4 million above initial forecasts. If that trend holds true, the state could see an extra $200 million in cash by the time the fiscal year ends, Michael DiBiase, CEO and president of the Rhode Island Public Expenditure Council, said in a tweet on Sept. 23.

But DiBiase didn’t think that surplus money should necessarily go to helping people pay their energy bills. RIPEC has stressed that one-time funding, either through ARPA or a surplus, should not be used to create ongoing programs that will require new sources of funding later on. Economic analysts expect energy prices will stay high for the foreseeable future thanks to ongoing market volatility. 

“It’s not clear the affordability needs of energy consumers are going to be a temporary event,” DiBiase said in an interview on Monday. “The concern is that we’re committing one-time money for not a one-time need.”

However, DiBiase also said it was important for Rhode Island to look to its neighboring states for best practices and ideas. Mass. Secretary of State William F. Galvin recently proposed using $50 million in state funds to help residents with winter heating costs.

While Rhode Island has boosted funding to help offset rate hikes in the past, it’s used federal money, not its own revenue, according to Greg Pare, a spokesman for the R.I. Senate.

In a joint statement, R.I. Senate President Dominick J. Ruggerio and House Speaker K. Joseph Shekarchi said they will “be exploring other additional legislative options” to help reduce energy bills for Rhode Islanders, although they did not provide details on what those options are.

The new electric rates approved by the R.I. Public Utilities Commission take effect Oct. 1. A separate proposal for winter gas rates will be considered at a later date.

Nancy Lavin is a PBN staff writer. You may reach her at

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