PROVIDENCE, RI — RI Energy owes rate payers up to $39 million more than the utility is attempting to assess in its proposed formula determining its responsibility to protect ratepayers from increased expenses from its 2022 purchase of Narragansett Electric, Attorney General Peter Neronha says.
The Division of Public Utilities and Carriers (DPUC) approved the sale of The Narragansett Electric Company to Rhode Island Energy based on the company’s commitment to hold ratepayers harmless from any increased costs attributable to the sale. The Attorney General’s expert estimates that Rhode Island ratepayers could lose up to $39 million if an appropriate discount rate is not used to determine the present value of Rhode Island Energy’s commitment.
“If Rhode Island Energy wants to front load some of the hundreds of millions of dollars secured for Rhode Island ratepayers at the time of the sale, that’s fine by me, but they better be coughing up every last penny that they owe,” said Neronha.
“Immediate relief for skyrocketing and unstable energy costs is desperately needed. However, the discount rate that Rhode Island Energy used to calculate how much they owe ratepayers shortchanges Rhode Islanders by tens of millions. Rhode Island Energy needs to keep up their end of the bargain and provide the full value they owe to ratepayers, many of whom are struggling to make ends meet. Look past the smoke and mirrors and what you’ll see is a company placing profits over people, and we want Rhode Islanders to get the full relief they deserve.”
RIAG: RI Energy Proposes Flawed ‘Hold Harmless Commitment’ Math
Recently, Rhode Island Energy sought to change the method of satisfying the Hold Harmless Commitment through a proposal for miscellaneous bill credits to be issued in the winters of 2026 and 2027. Rhode Island Energy determined the amount of money that would be owed to ratepayers under the Hold Harmless Commitment through 2062 (the last year impacted by the changes in ADIT) to be approximately $241 million.
Rhode Island Energy then discounted that nominal total to determine a present value that could be used to compensate customers today, considering the time value of money. They used the company’s Weighted Average Cost of Capital (WACC) as a discount rate and concluded the present value of the Hold Harmless Commitment to be approximately $148.7 million.
According to the RI Energy filling with the DPUC, “The miscellaneous bill credits to be provided pursuant to the temporary tariffs are the subject of the Agreement, dated June 13, 2025, by and among The Narragansett Electric Company d/b/a Rhode Island Energy, PPL Corporation (“PPL”), PPL Rhode Island Holdings, LLC (“PPL Rhode Island”), and the Advocacy Section of the Rhode Island Division of Public Utilities and Carriers (the “Advocacy Section”) (the “Hold Harmless Implementation Agreement”) to provide the Company’s customers with the full net-present value of PPL’s obligation to hold harmless Rhode Island customers from any changes to Accumulated Deferred Income Taxes (‘ADIT’) as a result of the Transaction.”
1 As set forth in the Hold Harmless Implementation Agreement, the Company will provide customers with miscellaneous bill credits totaling $154,974,636 (the “Total Hold Harmless Credit Amount”), which is composed of $74,919,759 for electric distribution customers (the “Electric Hold Harmless Credit Amount”), $79,912,470 for gas distribution customers (the “Gas Hold Harmless Credit Amount”) and $142,407 for customers.”
Neronha argues, supported by expert testimony, that the discount rate used by Rhode Island Energy significantly understates the value owed to ratepayers by $37-$39 million dollars. When Rhode Island Energy uses its WACC as a discount rate, they overlook the obvious fact that Rhode Island Energy’s customers are differently positioned than the company in terms of their ability to invest the money coming into their pockets today, instead of in the future. The Attorney General contends that using more reasonable discount rates, including the Customer Deposit Rate or the 10-year Constant Maturity U.S. Treasury rate, would result in tens of millions of dollars in value that Rhode Island ratepayers are rightfully owed by the Company.anse
Author: Rob Borkowski
Rob has worked as reporter and editor for several publications, including The Kent County Daily Times and Coventry Courier, before working for Gatehouse in MA then moving home with Patch Media. Now he's publisher and editor of WarwickPost.com. Contact him at editor@warwickpost.com with tips, press releases, advertising inquiries, and concerns.
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