What to know about RI Energy’s higher winter electric rates – and available help for bills

• Rhode Island Energy proposes a winter electricity rate of 14.8 cents per kilowatt hour, a nearly 10% decrease from last winter.
• While lower than recent years, the proposed rate remains higher than pre-2021 levels due to market fluctuations and global energy demands.
• Rhode Island Energy plans to expedite bill credits and provide additional assistance programs for low-income customers.
• The company has adjusted its procurement practices to take advantage of temporary price drops in the spot market.

Electric rates for most Rhode Islanders this coming winter would be the lowest for the season in four years, under a proposal filed with state utilities regulators on July 21.

Rhode Island Energy, the state’s dominant energy company, is proposing to set what’s known as the “last resort service” rate at 14.8 cents per kilowatt hour for residential customers. That’s a nearly 10% decrease from last winter’s rate of 16.4 cents per kwh.

It’s also 3 cents per kwh less than what customers were paying in the winter of 2021-22, when the rate hit a record high in Rhode Island, mirroring trends in other parts of the country as global demand for natural gas surged amid a supply disruption caused by the war in Ukraine.

Rates stayed abnormally high for the next two winters as the after-effects of the wholesale price spikes slowly eased.

But even with the drop in prices, the rate that would take effect for Rhode Island Energy’s approximately 500,000 electric customers on Oct. 1 and remain in place until March 31 is still substantially higher than what it was before the market turmoil started four years ago.

RI Energy says winter rates will go up, but less so than in previous years

Still, while Rhode Island Energy president Greg Cornett said he couldn’t rule out future market disruptions, he also said there may be reasons for optimism.

“If you look at supply prices in the forward market, it does appear that they are continuing to go down a little bit,” Cornett said at a news conference outside the company’s Providence headquarters. “So that’s one thing. The second thing is we’ve adjusted our procurement practices over the past year.”

The company is now buying 15% of its supplies on the spot market, rather than the previous 10%, in order to take advantage of any temporary price drops. The remainder of supplies are secured under staggered contracts in advance of when the power’s needed.

The media event announcing the proposed rate change was unusual for the company. It comes after a winter in which state lawmakers and activists excoriated the company for prices that are high relative to the rest of the country and put forward a series of ultimately unsuccessful proposals to cut costs.

RI Energy announces moves to help low-income customers

Along with the new rate proposal, Cornett also announced measures that the company and state government are taking to temper bill impacts for customers. Most notably, Rhode Island Energy has submitted a proposal with the state Public Utilities Commission to truncate the amount of time in which customers would be paid previously agreed-to bill credits.

Under the terms of an agreement Rhode Island Energy parent PPL Corporation made when it bought the company three years ago, it committed to absorbing the tax liability that arose from the purchase rather than passing it on to ratepayers. The credit would amount to about $150 million over 40 years.

Rhode Island Energy had been paying customers incrementally every month, amounting to a few cents on a bill. The company instead now wants to pay the credit to electric and gas customers this coming winter and the following one. In January, February and March of 2026 and 2027, electric customers would receive a $20-30 monthly credit and gas customers would get a $40-50 monthly credit.

Low-income customers would get a further helping hand with a $5 million allocation from the Regional Greenhouse Gas Initiative, a cap-and-trade program for power plant emissions that makes payments to Rhode Island and other member states. They would receive credits of a still-to-be determined amount in October, November and December of this year.

Also to help the lowest income customers with their winter bills, Rhode Island Energy is creating an employee-funded assistance program, Cornett said. It will be called Operation Help and will work in conjunction with the Good Neighbor Energy Fund, an existing program in the state that offers aid for heating bills.

Why do electric rates rise in the winter and drop in the summer?

Although the upcoming winter rate proposal is lower than those from the last few winters, it is still higher than the rate of 10.1 cents per kilowatt hour that customers are paying now. For many years now, rates have followed an annual pattern of rising in the winter and going down in the summer.

That’s because New England has an overdependence on natural gas for energy and a constrained pipeline system. Demand climbs in the winter on the back of heating needs and ebbs in the summer as temperatures climb.

For the typical customer that uses 500 kilowatts of power per month, the monthly bill next winter would be $163.29. That’s $24.49 more than the current monthly bill for the same customer, but $5.55 less than last winter.