An attorney for utility regulators says price cap on electric rate hikes could boost bills

EnergyAssociated Press

An attorney for Rhode Island's Public Utilities Commission is warning lawmakers that setting a limit on how much electricity rates can rise could result in even higher bills for consumers.

Utility regulators in December approved a contentious 24 percent rate increase spread over all of this year. Now the General Assembly is considering several proposals to limit rate hikes, even though National Grid is required to procure power and is allowed to recover the costs.

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Some of the proposals would require that large rate increases be approved by the General Assembly before taking effect.

Cynthia G. Wilson-Frias, deputy chief of legal services for the Public Utilities Commission, told lawmakers that if they delayed approving needed rate increases to National Grid, the amount owed to the utility would continue to grow, resulting in even higher costs for consumers in the future. If lawmakers denied an increase, National Grid may be able to take legal action and argue that the law would be unconstitutional as applied, she said.

Wilson-Frias wrote to lawmakers in late January when a hearing was held on one of the bills, and again Tuesday, before a House committee was scheduled to take up three more price cap proposals.

National Grid spokesman David Graves said lawmakers are being irrational and ignoring the market forces at play. The recent rate hike was due to a higher demand for natural gas, with more power plants burning natural gas to generate electricity, he added.

Graves emphasized that National Grid does not profit from the price of electricity. He said the utility is legally required to buy electricity for customers at the lowest possible rate and pass that cost on. He said price caps aren't the answer.

"There's just not enough natural gas getting into New England to meet the demand," he said Tuesday. "Until we have an adequate supply of natural gas we're going to see these seasonal rate increases for the foreseeable future."

The bills seek to limit rate increases but in different ways. Increases could be capped at a set percentage; capped at a set percentage and require General Assembly approval for anything higher; or tied to the Consumer Price Index.

Thomas Kogut, a spokesman for the state Division of Public Utilities and Carriers, said he understands the intent of the bills.

"It is frustrating from a regulatory point of view as well, when you see the impact of the volatile rates for the region," he said. "At the same time, one of the concerns is these caps could simply lead to deferrals, and deferrals could lead to larger rate increases."