Emergency Council Chairman Roger Buck.
Narragansett Electric Co.’s plan to bring Rhode Island closer to one set of electric rates got another boost last week when the company settled its differences with The Energy Council of Rhode Island. Narragansett Electric last month reached agreement with the state Attorney General and other parties that had opposed parts of the rate plan.
Narragansett Electric’s parent company is seeking to acquire the parent company of Blackstone Valley Electric Co. and Newport Electric Corp. for $635 million. Narragansett Electric came to an understanding with the Attorney General and other intervenors in the rate case last month when it proposed a new plan to reduce and freeze rates after the merger.
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But the company’s rate plan, which has been revised several times in the face of stiff opposition, had to be slightly revised one more time to win support from The Energy Council of Rhode Island, which represents industrial companies and other heavy energy users.
Narragansett Electric agreed to give industrial customers a chance to revisit their rate structures at the end of the rate freeze, Narragansett officials said. Interested parties would be able to question rate structure anyway if the electric company filed another rate case after the freeze, but the agreement worked out with the Energy Council allows them to do so if they wish even if Narragansett Electric doesn’t file a rate case then.
The Energy Council signed onto the proposed settlement last week, according to Narragansett Electric officials. Energy Council Chairman Roger Buck couldn’t be reached by press time.
The Energy Council initially didn’t back the proposed settlement, saying it needed more time to review it.
“I’m not going to come out and endorse this thing until I have a chance to hear a thorough presentation on what this settlement really is,” Buck said at the time the settlement was proposed. “We want to go and hear all the details of this thing.”
A three-page summary of the proposed settlement agreement was presented to the state Public Utilities Commission on Jan. 28. The full settlement agreement among the company, the attorney general’s office, the Division of Public Utilities and Carriers and the Navy was filed with the PUC on Jan 31.
A conference was held last Tuesday to determine how much time the company would need to make its case for the settlement before the PUC, which presumably would have been longer if the Energy Council had continued to oppose it.
Hearings on the matter were scheduled to begin last Friday and continue on Tuesday. If more time is required the hearings would continue on Thursday and Friday.
The revised rate plan would cut the electric rates for Blackstone Valley Electric and Newport Electric customers down to those paid by Narragansett Electric Customers. Narragansett Electric customers, who make up three-quarters of the Energy Council’s membership, would get a small reduction in their rates under the settlement agreement.
“It’s not a hell of a lot better, but it’s a little bit better,” Buck said before the Energy Council signed on to the settlement.
The original rate plan and a revised version didn’t include rate cuts for Narragansett Electric customers.
Under the proposed settlement, Narragansett Electric is denied the right to recover $110 million in merger costs through rates as it had initially sought, but the utility is allowed to pocket half of any merger-related savings it can demonstrate.
Commissioner Kate Racine said the PUC is free to tweak parts of the rate plan even though all the parties have agreed to it.
“It shows agreement among the parties so you don’t have to litigate each and every factor,” Racine said. “But it doesn’t preclude the commission from going into it and questioning it.”
The settlement agreement lowers rates overall by $13 million a year, freezes rates for five years and doubles the number of low-income customers eligible for discounted rates. The original version of the rate plan reduced rates by just $5 million overall.
Narragansett Electric’s parent company, New England Electric System of Westborough, Mass., expects to complete the merger in March, more than a year after the deal was announced. If so, the new rates would take effect on April 1 and be locked in through 2004.
A second merger with National Grid Group PLC of Coventry, England, is awaiting regulatory approval from the Securities and Exchange Commission in Washington, D.C.
