McKee proposes $4 million in relief to ease electric rate hike for low-income customers

PAWTUCKET – With electric rates set to spike this winter, low-income Rhode Islanders are set to get some relief.

Governor Dan McKee on Wednesday announced a plan to use nearly $4 million in state funds to partially offset the rate increase for the 39,000 customers of Rhode Island Energy who qualify for what’s known as the A-60 rate, a discounted electric price for low-income households.

The $3.9 million in funding will come from Rhode Island’s allocation from the Regional Greenhouse Gas Initiative, a 12-state cap-and-invest program that makes power plants pay for carbon emissions.

Revenues from the program, which are distributed annually, typically pay for investments in energy efficiency upgrades and renewables.

But with electric rates set to hit record highs starting Oct. 1, the McKee administration took the unusual step of tapping into RGGI money to help temper the increase.

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“This will help ease the burden of higher-than-average electric prices and continue our commitment to provide relief to Rhode Islanders in the face of rising prices and inflation,” the governor said at a news conference at the community center operated by the Blackstone Valley Community Action Program, an organization that provides energy assistance and other support to low-income families.

Rhode Island Energy, the dominant energy provider in the state, announced last month that its winter rate that will be in effect from Oct. 1 to March 30 will be more than double the current rate.

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Winter electric rates are always higher than summer rates because of increased demand for natural gas, the primary fuel for generating electricity in New England and a main source of heating, but this year’s increase is unlike any other. It comes amid rising costs for consumer goods and volatility in global energy markets partly due to the war in Ukraine.

Utilities across the region are experiencing similar, if not higher, rate increases. Because energy rates are pass-through costs, utilities regulators have few options to amend them. The Rhode Island Public Utilities Commission is expected to grant Rhode Island Energy’s request to raise rates.

For the company’s 500,000 electric customers, after delivery fees and other costs are factored in, it will mean that bills for many will increase by about 50 percent. The monthly bill for a typical household that uses 500 kilowatt hours will jump from about $111 to $163.

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And for those on the lower A-60 rate, the bill is set to go from $82 to $121. The RGGI money is expected to amount to approximately $14 to $17 a month, or about a 12 to 17 percent reduction in the bill total. Public hearings on the proposal are scheduled for September, with the administration planning to have the money ready for when the rate hike goes into effect.

McKee is also asking the PUC to suspend the $6 monthly customer charge on user bills until next summer when rates are expected to drop again; to distribute to customers during the winter period $32.5 million in bill credits that Pennsylvania-based PPL Corporation agreed to in a settlement with the state when it purchased Rhode Island Energy last spring; and to moderate the impact of the rate hike by spreading its costs out over 12 months, rather than the usual six-month period.

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Such a move to spread out the costs of a rate increase has been done before, in 2015 during a previous surge in natural gas prices.

“In the face of an unprecedented, temporary rate increase, we must work collectively to do everything possible to maintain the affordability of energy during this coming winter,” McKee said in a letter to the utilities commission

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This article originally appeared on The Providence Journal: Rhode Island electric rates: Gov. McKee plans aid money