AG objects to Narragansett Electric sale to PPL

Will the sale of the Ocean State’s electric provider to Pennsylvania’s top power company result in higher electric bills?

A state utility regulatory agency says they’re convinced the sale will be in the public’s “best interest.”

The Rhode Island Attorney General, however, has filed a lawsuit arguing his office isn’t convinced the state’s power customers will benefit.

Last week, the Rhode Island Division of Public Utilities and Carriers (RIDPUC) approved the sale of Narragansett Electric Company (NEC), which provides power to practically every customer in the Ocean State.

In an attempt to stop the sale, Attorney General Peter F. Neronha filed an appeal, arguing the transaction may not be “in the best interest of Rhode Islanders.”

Nearly all Rhode Island power customers buy electricity from a single source, the NEC, currently owned by National Grid.

Pennsylvania Power & Light (PPL), an Allentown, Pennsylvania-based power provider, wants to buy NEC.

“My Office has filed a motion in Rhode Island Superior Court to appeal and stay (the Feb. 23) decision by the Division of Public Utilities and Carriers to approve the sale of Narragansett Electric to Pennsylvania-based PPL,” Neronha said in a statement on Thursday, Feb. 24. “This proposed transaction would have enormous consequences for all Rhode Islanders, and we will continue to advocate to ensure an electric and gas utility that is in the best interests of Rhode Islanders and that complies with Rhode Island law.”

PPL received unanimous approval from the Federal Energy Regulatory Commission (FERC) to acquire NEC from National Grid USA in September 2021, for $5.3 billion.

If approved, NEC will become the sole subsidiary of a newly formed PPL Rhode Island Holdings, which will then become an indirect subsidiary to PPL.

The deal also involves the transfer of some overseas utility assets.

Witnesses for PPL and the opposition delivered testimony before the RIDPUC from Monday, Dec. 13, through Thursday, Dec. 16, 2021.

The agency performed “a thorough examination of the record that included participation of nine parties, 17 witnesses who offered testimony, thousands of pages of discovery, four public hearings, many public comments, post hearing briefs, and reply briefs,” according to Thomas F. Kogut, RIDPUC Associate Administrator.

Several local environmental advocacy groups and Neronha’s office have objected to the sale. State law required PPL to prove the transaction would be “in the best interests” of Rhode Island residents.

The term “best interests,” however, has been interpreted differently on all sides.

“The Division finds that after a thorough examination of the record in this docket, including the many public comments that were offered, the evidence demonstrates: (1) that the facilities for furnishing service to the public will not thereby be diminished [if the Petition is approved], and (2) that the purchase... [and] sale... and the terms thereof are consistent with the public interest,” according to the RIDPUC report and petition order.

Agreement lacks assurances, Neronha argues

Neronha’s court filing disagrees.

“As detailed in court filings, my Office has appealed the decision on the grounds that it does not sufficiently provide assurances that the sale is in the best interests of Rhode Islanders,” Neronha said.

The Attorney General will argue in court that PPL has yet to prove customers will not experience “degradation

of services or significant rate increases.”

Neronha also insists PPL must show the company “is capable of creating an effective storm response without increasing costs to ratepayers” and “can provide necessary IT services without increasing costs to ratepayers.”

Neronha said his office also shares the concerns of local environmentalists, arguing PLL must prove it can “effectively work with the state to meet emissions and other goals required by the Act on Climate.”

Neronha’s office — and advocacy groups like CLF, Green Energy and the Acadia Center — have raised “public interest” concerns connected to “PPL’s willingness to acquiesce to the State’s aggressive decarbonization goals,” Kogut said.

“However, the Division finds that each of their demands would rise to the level of imposing a net benefit standard on PPL,” Kogut explained in a statement distributed to the media. “None of their recommended conditions for approval are required under existing statutory law; they seek to impose conditions on the sale that not even National Grid is required to follow at this time.”

PPL has pledged to “enthusiastically abide by all regulatory requirements designed to advance the State’s environmental goals,” according to Kogut.

“These requirements will be imposed by the Commission, with Division participation,” Kogut wrote. “In the meantime, PPL has committed to step into National Grid’s shoes with respect to all existing programs and initiatives, including its energy efficiency programs and renewable energy procurement processes. PPL has also made several long-term commitments in support of its efforts to comply with the Act on Climate and to demonstrate its pursuit of a robust renewable energy agenda.”

Besides environmental worries, Neronha has also raised other concerns with the transaction.

“Additionally, the decision did not consider whether PPL had a viable post transaction financial plan, nor was one submitted,” Neronha said. “I am not alone in raising these issues — the DPUC’s own attorneys and experts expressed serious unresolved concerns about this transaction during the hearing before the DPUC. Furthermore, I am concerned about the legal standard that was used by the hearing officer in reaching the decision — a legal standard that creates a low threshold for approval of these significant transactions that would potentially leave Rhode Islanders at future risk.”