National Grid Needs to Be Held Accountable, Ratepayers Need to Be Protected -- Says Lt. Gov.

National Grid Needs to Be Held Accountable, Ratepayers Need to Be Protected -- Says Lt. Gov.

Rhode Island Lieutenant Governor Dan McKee is pushing for legislation that would hold National Grid — and all utilities in the state — accountable in the event of an emergency.  

And while the week-long Aquidneck Island gas emergency that saw 10,000 Rhode Island residents and businesses impacted is drawing to a close, McKee, who appeared on GoLocal LIVE, spoke to National Grid’s slow response to a major snowstorm in 2017 as the impetus for introducing the legislation in previous General Assembly sessions — and again in 2019. 

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“What was lacking in Rhode Island was storm response legislation. Massachusetts passed it years back — the [Massachusetts] Supreme Court supported the ratepayers and since that time $30M in fines were levied [in Massachusetts],” said McKee. “National Grid squashed that storm response bill. We’re going to continue to work to make that happen. This legislation will [allow] the PUC to levy fines.”

As GoLocal reported this week, National Grid has been fined more than $40 million in Massachusetts, both by state and federal agencies. 

McKee’s Utility Emergency Response Bill, which he plans to have submitted via legislative sponsors in the coming weeks, would do the following: 

Performance standards: The Division of Public Utilities & Carries will establish performance standards for acceptable emergency preparation and response for investor-owned utility companies. Failure to meet the standards will result in penalties of up to $100,000 daily per violation.

Emergency response plans: Utility companies will be required to submit annual emergency response plans to the DPUC. Failure to file will result in a fine of $500 per day. If the utility company fails to follow the emergency response plan, the company may not recover its storm-associated costs by charging the ratepayers.

Credits for ratepayers: All fines paid by utility companies for violating this legislation will be credited back to Rhode Island ratepayers.

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Rhode Island-National Grid Relationship

“You have to err on the side of safety. National Grid and the Governor have done that [this past week], but going forward — we need to protect the ratepayers in as many ways we can,” said McKee.  “We regulate National Grid and all the utilities. We need to have good relationships, but we need to protect the ratepayer.”

McKee spoke to the issue of dealing with a foreign-owned utility company, in the case of National Grid. 

“The corporate decisions made outside of the state handcuff what we’re used to…[such as] Blackstone Valley Electric,” said McKee. “I can talk about the men and women on the ground, the 600-700 people from all over New England who came to service Newport — it was clear you had a response with the local people for the local people. But having a corporation and decisions that are made on profit lines — that’s why I’ll repeat, we need good relationships but we need to regulate them and that’s why we’ve intervened with several dockets over the last several years.”

“This is why we can’t fine the utilities — we don’t have the legislation in place, “said McKee, who noted his recent efforts to ensure that Rhode Island ratepayers are reimbursed millions in over-collections made after Congress passed the 2017 Tax Cuts and Jobs Act reducing National Grid’s federal corporate tax rate from 35 percent to 21 percent. 

“We’ve been fighting for the tax change in the legislation — we saw it was a tax windfall for Grid, and there was a $26 million recovery, and an additional $8 million that should be going back to the ratepayers,” said McKee. The $8 million will be restored.”

Addressing Aquidneck Island Costs

In National Grid’s General Rules and Regulations with the PUC, under “supply of gas,” the terms and conditions under “10.0 Supply of Gas,” the issue of liability is spelled out as follows:

The Company shall make every reasonable effort to maintain an uninterrupted supply of gas for all firm customers, but it shall not be liable for loss or damage caused by reason of any interruption or reduction of the supply, or by reason of any abnormal pressure or quality of the gas, whether as a result of accident, labor difficulties, condition of fuel supply, the actions of any public authority, failure to receive any gas for which in any manner it has contracted, the implementation in accordance with good utility practice of an emergency load reduction program by the Company or one with whom it has contracted for a supply of gas, or inability for any other reason beyond the Company’s control to maintain normal pressure or quality, or uninterrupted and continuous service.

“Historically, this kind of language has been a very difficult bar to clear by those seeking to be reimbursed by a public utility for damages. Whether or not the pipeline owner could be held liable would come down to the language in their tariff and any precedent,” said Andrea Palagi in McKee’s office. “The legislation that the Lieutenant Governor introduced last January would give the Public Utilities Commission the ability to issue fines to utilities who fail to meet the Commission’s standards for emergency preparation and response.”

When reached on Monday, Governor Gina Raimondo’s office said the state would conduct a full investigation. 

“The Governor’s focus remains on ensuring that everyone gets heat turned on as quickly as possible and that business and families have the support they need. We will conduct a full investigation and hold the responsible parties accountable. DPUC has already begun looking into the cause of this incident and will do all that it can to ensure the cost is not passed on to Rhode Island ratepayers,” said Josh Block in Raimondo’s office.