PROVIDENCE – Rhode Island’s primary utility business will soon be in the hands of new owners after securing the blessing of state regulators on Wednesday.
The R.I. Division of Public Utilities and Carriers announced in an order it has approved the sale of Narragansett Electric Co. from National Grid to PPL Corp., effective immediately. The state approval marks the final regulatory hurdle for the Pennsylvania-based company to take over Rhode Island’s utility company, having already secured approval from federal regulators and company board in the $3.8 billion deal.
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“We appreciate the Division’s thoughtful consideration of our petition for approval,” PPL spokesman Ryan Hill said in an emailed statement on Wednesday.” “We look forward to the successful close of this transaction and are excited about the opportunity the acquisition will present for PPL to drive significant value for Rhode Island families and businesses and advance a cleaner energy future. PPL will announce the completion of the acquisition upon close.”
Hill did not specify when the transaction was expected to close.
National Grid also issued a statement saying “it looked forward to the completion of the sale.”
The state’s 300-page order recaps the details of the proposed sale as well as multiple hearings that included testimony from 26 witnesses representing the company and other stakeholders. Several groups, including the R.I. Office of the Attorney General and consultants hired by the state, called for the deal to be denied, listing financial, environmental and service concerns.
The division’s decision rests primarily on two criteria set forth in state law: whether the change in ownership does not hurt the service and that the deal is “consistent with public interest.” The division ultimately found the proposal met these standards, according to its order.
While other groups had asked for more oversight and detail on how the deal would affect rates, the division also said in its order that state law does not “justify or require” this kind of post-transaction analysis.
“The Division found there are sufficient safeguards in place to minimize rate implications from the transaction,” the order stated.
Among them are the commitment by PPL – as requested by the attorney general’s office – to not seek an increase in base distribution rates for gas and electric services for at least three years following the close of the sale. Even then, any rate increase requires the blessing of the R.I. Public Utilities Commission.
PPL also agreed to absorb at least 80% of the estimated $400 million transition costs.
Both of these conditions were laid out in a December filing by PPL and National Grid, detailing 17 commitments assuage concerns over the deal.
PPL will submit a report to the division within a year of the transaction close, detailing how it aims to decarbonize the state power business and to meet the mandates set out in the state Act on Climate law. Lack of focus on this legally-enforceable mandate, which calls for the state to hit zero net-carbon emissions by 2050, was another top concern among environmental groups, including the Green Energy Consumers Alliance and the Conservation Law Foundation.
Kai Salem, policy coordinator for Green Energy Consumers Alliance, said in an interview Wednesday that she was “disappointed” by the state’s decision to approve the sale. Even with PPL’s promise to submit more information on decarbonization later, Salem said she felt the Act on Climate law had been largely ignored during the proceedings.
Salem said the approval was proof that the state needed to add teeth to its existing climate mandates, something she hoped would happen in the 2022 legislative session.
The division in order, however, said that enforcing that law was under the purview of other state agencies, and it would be “’inappropriate’ for the Division to sidestep those efforts.”
The R.I. Office of the Attorney General declined to comment on the sale, saying it was “still reviewing the decision,” spokesperson Blake Collins said in an email on Wednesday.
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.
(Story updated with comments from PPL Corp., National Grid, Kai Salem, policy coordinator for Green Energy Consumers Alliance and R.I. Office of the Attorney General.)
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
