Winter Energy Costs in Rhode Island May Be Far Worse Than Expected

Winter Energy Costs in Rhode Island May Be Far Worse Than Expected

In July, Rhode Island Energy announced it was seeking a 47% rate increase in the residential electricity rate.

But, the other shoe has yet to drop. How much will natural gas costs increase could be the bigger question.

There are numerous signs that the cost to heat and light a house in Rhode Island this coming season will be more than a proverbial winter of discontent. 

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The sale of National Grid to PPL -- who rebranded it as Rhode Island Energy -- was finalized this past May. 

 

Gas Market Is Seeing Rampant Price Increases

The global gas market is in turmoil and so is the domestic.

The Wall Street Journal reported this week, “The 14-year highs reached this week by U.S. natural-gas futures show the unceasing demand for U.S. shale gas across the Atlantic—and likely point to rising prices and market volatility ahead. The latest price spike came in response to Russia’s plans to shut down one of Europe’s main fuel arteries for a few days at the end of the month. The closure announced Friday is either the latest episode of unplanned maintenance along the vital Nord Stream gas pipeline or an act of economic warfare on Russia’s part in retaliation for Western Europe’s support for Ukraine.”

On Friday, Britain’s government sent shock waves. Energy prices paid by most British households are set to rise 80% this fall as regulators increased the cap on how much natural energy companies can charge.

Ofgem, the government’s energy regulator, approved a hike on electricity and natural gas cost that allows would rise to £3,549 (about $4,200) from the current £1,971.

And, the war in Ukraine is sparking dramatic action by the Russians.

“Russia is burning off large amounts of natural gas, according to analysis shared with BBC News. They say the plant, near the border with Finland, is burning an estimated $10 million (£8.4m) worth of gas every day. Experts say the gas would previously have been exported to Germany.

Germany's ambassador to the UK told BBC News that Russia was burning the gas because they couldn't sell it elsewhere,” reports the BBC.

 

Rhode Island Awaits

Now, Rhode Islanders await what the increase in natural gas costs will be.

A filing for a rate increase could be filed at any time by Rhode Island Energy for a rate increase.

 

Electricity Relief

Governor Dan McKee and the Office of Energy Resources (OER) recently announced a proposal to use $3.8 million in funding from the Regional Greenhouse Gas Initiative (RGGI) fund to provide direct rate relief to low-income Rhode Island residents who are most at risk of not being able to afford their electricity bills this winter.

This funding proposed by McKee is expected to help approximately 39,000 low-income customers with Rhode Island Energy billing accounts during the winter electricity rates period from October through March.

On behalf of the Governor, OER will be proposing the RGGI Allocation Plan draft for a 30-day public comment period that will provide direct rate relief to low-income customers and maintain ongoing support for prior RGGI funded efforts on climate change, renewables and energy efficiency to advance the state’s goals with Act on Climate.

The rate relief announcement comes after McKee sent a letter last week urging the Public Utilities Commission to take specific action to provide relief to all Rhode Islanders in response to Rhode Island Energy's request for a rate increase. These actions include:

- Suspending the customer charge on residential electric bills until next summer when electricity prices are projected to decline significantly.
- Distributing the $32.5 million in Rhode Island Energy electric ratepayer bill credits from the State's settlement with PPL Corporation back to ratepayers over a six-month period that coincides with this coming winter when electric rates will be elevated.
- Moderating the impact on ratepayers by spreading the higher rates over a twelve-month period.

“This surge in electricity costs this winter are going to impact all Rhode Islanders,” said McKee. “Our most vulnerable residents do not have the means to absorb this rate increase. We have a responsibility to do everything possible to protect them. That's why we're proposing to use $3.8 million from our RGGI funds to provide direct rate relief to low-income utility customers who are most at risk this winter. This will help ease the burden of higher-than-average electricity prices and continue our commitment to provide relief to Rhode Islanders in the face of rising prices and inflation.”