PROVIDENCE – The final obstacle in the sale of Rhode Island’s primary utility business has been cleared, with the R.I. Office of the Attorney General on Monday announcing a settlement with the companies involved.
The agreement includes an extra $200 million in protections for Rhode Island ratepayers, who the Attorney General’s Office said were at risk of seeing their bills soar once National Grid sold Rhode Island’s power business off to Pennsylvania-based PPL Corp.
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“Folks, this is a big deal,” Attorney General Peter F. Neronha said, speaking during a press conference on Monday. “We’re giving the monopoly on Rhode Island’s power to someone else. The time to act is now.”
The deal struck between Neronha’s office, state regulators and the companies involved paves the way for the $3.8 billion sale of Narragansett Electric Co. to become final, with the R.I. Superior Court lifting its hold on the transaction in an order filed on Monday.
A state judge in April had put the sale on ice pending further review in response to a complaint filed by Neronha’s office. The complaint alleged that state regulators violated the review required by state law when they approved the sale earlier this year.
Neronha on Monday continued to point the finger at R.I. Division of Public Utilities and Carriers for a decision that he said did not consider the public interest of ratepayers and state decarbonization mandates.
“One of our biggest problems with the DPUC’s decision was that it applied the wrong legal standard,” Neronha said. “They chose the minimum rather than the maximum protection.”
Neronha’s office, along with other consumer protection and environmental advocacy groups, urged the DPUC not to approve the sale due to fears that higher costs would be passed on to ratepayers and that the companies did not provide enough detail on how they would meet decarbonization goals laid out in the state’s Act on Climate law. The DPUC in its 300-page February decision, however, said that requiring post-transaction rate analysis or climate change mandates was beyond the scope of its purview.
The original approval called for a three-year moratorium before PPL Corp. could begin proposing higher rates. The settlement reached on Monday “significantly exceeds” those terms, providing for $200 million in a combination of direct credits to ratepayers and protections against ratepayer contributions to other costs for PPL.
Specifically, $50 million in relief will be granted directly to power customers through ratepayer credits, with another $43.5 million of debt from missed payments by low-income ratepayers now forgiven.
Ratepayers are also no longer on the hook for the estimated $103 million in cost recovery that PPL would have sought to help pay for new investments in information technology upgrades and other expenses related to its takeover of Narragansett Electric.
On the environmental front, PPL will pay $2.5 million into the state Renewable Energy Fund, which offers grants to solar and other renewable energy projects, and another $2.5 million to the Attorney General’s Office to hire consultants who will consider how future state energy projects and programs fit in with Act on Climate mandates. PPL will also have to hire its own consultant to prepare a report on how it will incorporate these state climate change requirements into its own current and future programs.
The agreement and corresponding judicial decision are the first to acknowledge and apply the mandates set forth in the Act on Climate law to all state agencies, Neronha said.
Finally, while National Grid is no longer on the hook for Rhode Island’s power business once the sale goes through, it must provide crews from neighboring Massachusetts to Rhode Island before any other state to help out during storm responses under a mutual aid agreement included in the settlement.
While Neronha in his original complaint to Superior Court asked for the court to send the decision back to state regulators for further review, he said Monday the settlement was a better option.
PPL and National Grid also expressed support for the settlement deal in statements on Monday.
“We’re pleased we’ve achieved this outcome, which further underscores PPL’s steadfast commitment to Rhode Island customers and to advancing the state’s ambitious decarbonization goals,” Vince Sorgi, PPL CEO and president, said in a statement. “We have said throughout the approval process that PPL would bring clear value to Rhode Island, and the additional commitments announced today will provide direct and indirect benefits to customers that we believe will form the basis of a constructive and long-lasting presence in the state. At the same time, the acquisition will provide PPL with a more diversified portfolio of assets, reduce the proportion of revenues derived from coal generation as part of our business mix, and create additional opportunities to invest in a sustainable energy future.”
With the court order vacating the complaint, National Grid will move forward with the sale to PPL Corp., Ted Kresse, a National Grid spokesman, said in a statement.
Per the terms of the deal, National Grid will continue to offer certain services for Narragansett Electric for up to two years after the sale.
Once the transaction closes, PPL will serve roughly 3.5 million electricity and gas customers in the United States, including an estimated 780,000 in Rhode Island.
(UPDATES throughout, including comments from Attorney General Peter F. Neronha.)
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
