Rhode Island businesses could pay nearly 20 percent more for electricity

RHODE ISLAND, along with the rest of New England, has some of the highest electricity costs in the country. / BLOOMBERG FILE PHOTO
RHODE ISLAND, along with the rest of New England, has some of the highest electricity costs in the country. / BLOOMBERG FILE PHOTO/DANIEL ACKER
WARWICK – Rhode Island businesses could start paying nearly 20 percent more for electricity starting in October, as a proposed rate hike would increase commercial costs 51.9 percent to 9.3 cents per kilowatt hour. National Grid Rhode Island, the state’s largest utility, has proposed raising both commercial and residential fixed-electricity rates for the six-month period…
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  1. This report obfuscates as much as it illuminates regarding future cost trends for business consumers of electricity in Rhode Island. Key information, and a key question for Mr. Kresse are missing. Yes, this stiff rate increase request is based upon a generating capacity shortage that existed in 2014 due to the announced retirement of 3,400 mw by 2017 in the SEMA/RI zone, such generators as Brayton Point which closed in May. As a result, according to ISO New England, “administrative pricing rules were triggered in the SEMA/RI zone due to inadequate supply.” Hence, the record capacity market value of 3.1 billion realized at the February 2014 Forward Capacity Auction. Unreported is that in 2015, 4.1 billion was realized, suggesting that Mr. Kresse was being a triffle evasive when he said, “I think we may see the potential for higher rates next summer.” He should have faced further questioning. But the reporter is also opaque and elusive when he makes the speculative statement, “RI does not have as much of a capacity problem according to the most recent auction.” Hmm… “As much?” In fact, RI’s zone and the entire system has had no capacity problem at all in the last two annual auctions! In the 2016 auction, the total market realized fell back to 3 billion; and in the 2017 auction, the cost fell to 2.4 billion. So abundant was capacity in this year’s auction, that not one new gas-fired power plant was cleared, including the 485 mw unit that Invenergy put up for bid. So there is, in fact, no dire pricing trend ahead as we look past next year and realize what those plunging rates for capacity cost will mean for our electric bills. When the reporter wrote, “given the past economic forces of the region, future rates are likely to continue to increase,” he should have qualified that statement with the information from FCA Auctions 2016 and 2017, and speculated instead on the happy result they likely forecast for business consumers of electricity in the billing years 2019-20 and 2020-21.