The sweeping House legislation that seeks to cram several amendments into the state’s electricity restructuring act is in limbo after the two chambers passed differing versions of the bill.
The House bill – crafted after a series of public hearings on the issue before the House Corporations Committee last year – was passed May 30. But on the final day of the session last week, the Senate passed a substitute version substantially changing the legislation, without leaving the House enough time to take up the bill.
As it stands now, the legislation is dead – unless lawmakers are called back into session to attempt to override a potential veto of the proposed state budget by Gov. Lincoln Almond. If the two chambers do reconvene, there is a good chance the House would vote on the Senate version.
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“I’m in the unusual position of hoping that the governor follows through on a budget veto,” said Rep. Brian Patrick Kennedy, a Hopkinton Democrat and chairman of the House Corporations Committee, which spent over a year on the legislation.
Kennedy added that House Speaker John B. Harwood, also a key backer of the House bill, seemed “very confident” that lawmakers would be called back.
“At that point, I would expect the House would take up the Senate version of the bill, and I think it would sail through without a lot of discussion,” Kennedy said.
The Senate bill omitted several elements in the House bill, including a requirement that Narragansett Electric “unbundle” – or separate – the rates it charges for transmission and distribution of power from the rates charged for services, such as procuring supply contracts and processing utility bills.
That change would have created what is known as a “shopping credit” for customers who want to leave the utility to get power from an outside retailer. Instead of paying service charges to Narragansett, a customer would pay its retailer for those services.
But without unbundled rates, a customer who goes with an outside supplier will essentially be paying those service charges twice – potentially deterring retailers from entering the market to compete for contracts with large power users.
When the House legislation was introduced in February, the bill’s authors had said they hoped the creation of a shopping credit would serve as a short-term solution to spur competition for large energy users.
Other measures that were taken out of the Senate version include:
• A provision that would have required audits of the demand-side management fund, a pool of money generated via a “conservation charge” on each electricity customer’s bill. The fund, which totaled $27 million last year, pays financial incentives to businesses and consumers for installing low-energy motors and appliances, for example. It now is managed by Narragansett Electric.
• A requirement that utilities offer customers two choices of “green power,” or electricity generated from renewable sources such as wind or small-scale hydropower.
The creation of a ratepayers’ advocate office under the Attorney General’s office, which would have represented ratepayers before the Public Utilities Commission (instead of the Division of Public Utilities and Carriers, which fills that role now).
Despite those omissions, Kennedy said a number of important elements survived in the Senate version. Those include:
• Authorization for municipalities to negotiate electricity supply contracts on behalf of town residents.
• A requirement that Narragansett Electric’s “backup rates” – the rates it charges to be able to quickly supply power to companies that generate their own power on site – come in line with other National Grid subsidiaries by Jan. 1, 2005. Narragansett Electric has been criticized for charging backup rates that are nearly twice as high as Massachusetts Electric, which also is owned by National Grid.
Administration of the state’s renewable-energy program would shift from Narragansett Electric to the State Energy Office.
An increase in the number of PUC commissioners from three to five, though that change would be put off until the 2004 budget.
The Senate bill also would allow Narragansett Electric to enter into long-term generation contracts to supply last-resort customers, or users who left the utility for an outside supplier only to return later to Narragansett. Roughly 1,000 customers, mostly industrial users, are on last resort service.
That provision is expected to result in better rates for last-resort customers, who have complained that Narragansett’s short-term contracts with generators resulted in rate volatility.
Kennedy said the Senate bill, though somewhat watered down from the original House version, still manages to “addresses a substantial number of issues.”
And if lawmakers are not called back into session?
“It will be a major disappointment, considering that we’ve spent over a year working on this issue,” Kennedy said. “We would have to re-introduce the bill next year.”
Despite the wide-ranging changes in the House bill, lawmakers conceded – even with the bill’s introduction in February – that it would not bring about competition in the retail electricity market anytime soon.
That is primarily because the “standard offer” rate, Narragansett Electric’s charge for electricity generation, is fixed at 4.7 cents per kilowatt-hour through 2004, based on a ruling by the PUC earlier this year. That rate is widely considered to be too low to attract competition from outside retailers.
