Energy ratepayers in Rhode Island will soon be getting big credits on their monthly bills.
Rhode Island Energy has agreed to the latest iteration of a voluntary plan to accelerate compensation to customers for a tax liability that arose from PPL Corp.'s purchase of the company four years ago.
The new proposal put forward by state utilities regulators last week will credit electric and gas ratepayers a total of about $170 million over the next year, significantly more than what was originally proposed by the company more than a year ago.
"We took a hard look at it. We're comfortable with the methodology," Rhode Island Energy president Greg Cornett told The Journal on Aug. 25. "And most importantly, it gets the credits back to customers on an accelerated basis, which is what we were trying to achieve all along."
What to know: All of Rhode Island Energy's 500,000 electric customers will get a fixed monthly credit of $14 from this October to September 2027, while the company's 272,000 gas customers will be credited $51 a month from December through April of next year.
When the Rhode Island Energy sale took place in 2022, PPL agreed that the tax burden wouldn't be shouldered by ratepayers. The company made a "hold harmless" commitment to the state to pay back customers incrementally over decades through bill credits that have amounted to a few cents a month.
Last year, in an attempt to defray escalating energy costs, Rhode Island Energy announced an agreement with the state Division of Public Utilities and Carriers to compress the payback period to the three winter months in 2026 and again in 2027 so that customers would feel actual benefits from the credits.
The company calculated the credits based on an estimate for the net present value for the money it owed ratepayers. It said the figure amounted to about $149 million.
But after the plan was filed with the Public Utilities Commission for approval, the Office of Attorney General Peter Neronha disputed the company's estimate, arguing that it had undervalued the amount it owed by as much as $39 million. The commission too started asking probing questions about the company's estimate.
In response, Rhode Island Energy withdrew the plan from consideration, citing "unexpected and unwarranted opposition."
The company opened a docket with the utilities commission in the spring to work out a new customer credit plan. The commission folded consideration of the plan into a larger request that Rhode Island Energy made in the fall for new distribution rates to cover increases in infrastructure and operating costs.
During proceedings, the commission concluded that last year's agreement did, in fact, undervalue what Rhode Island Energy owes customers.
As part of their approval of the new distribution rates on Aug. 21, commission members unanimously agreed to a net present value of the credits at $170 million. They also laid out the plan to have the money repaid before the end of next year.
Commission chair Ron Gerwatowski said he expected the credits to entirely offset the increase arising from the higher distribution rates on the electric side and partially offset it on the gas side.
Cornett said in the interview that staff with Rhode Island Energy are still finalizing numbers for the ratepayer impacts of the new distribution rates but that Gerwatowski's characterization of the effect of the credits is accurate.
As to the differing estimates for the net present value of the credits, he said such calculations are exceedingly complex.
"This is one of those things that you get five experts in a room and get three or four ways of calculating it," Cornett said.
The hold harmless credits will be coming on top of a separate set of winter bill credits put together by the McKee administration using revenue from a regional cap-and-trade program on power plant emissions.
More help on Rhode Island Energy bills is also coming to qualifying low-income households this winter through a revamped program that discounts rates by up to 75 percent. The new program was approved as part of the distribution rate case.
"This is part of a larger effort to try to do our part to help with the affordability concerns that customers are facing," Cornett said.
This article originally appeared on The Providence Journal: New deal will give RI Energy customers help on their bills through September 2027