The Division of Public Utilities and Carriers approved the transfer of the Narragansett Electric Company from National Grid to PPL Corporation, finding that the sale is “consistent with the public interest.”
Under the deal, Pennsylvania-based PPL will purchase all shares in Narragansett Electric for $5.3 billion, taking on electric service for more than half a million Rhode Island customers and gas service for another 270,000 customers.
In a statement PPL said, “We look forward to the successful close of this transaction and are excited about the opportunity the acquisition will present for PPL to drive significant value for Rhode Island families and businesses and advance a cleaner energy future.” The company expects to close in March.
Ratepayer advocates had challenged the sale, arguing that cost-savings from shared services with neighboring Massachusetts would be lost and raising questions about the potential for rate hikes.
The companies “fail to show that PPL’s operating model will be as cost effective for ratepayers as National Grid’s. The Petition does not even attempt to make such a showing,” attorney Christy Heatherington of the Division of Public Utilities and Carriers’ Advocacy Section wrote in a post-hearing brief. Their “commitments regarding transition costs are insufficient to hold ratepayers harmless from the costs this transaction will produce.”
The state Attorney General’s office echoed these concerns, writing “[National Grid and PPL] have asserted, without adequate evidentiary support, that extracting Narragansett Electric from its current regional system and plopping it into a new corporate structure with distant utilities in Kentucky and Pennsylvania will somehow be without risk to the public.”
But hearing officer John Spirito rejected that argument. He argued that it was “unreasonable” to expect PPL to be able to predict how much it would cost to operate Narragansett Electric.
“The Division finds that there are sufficient safeguards in place to minimize the rate implications from this uncertainty,” he wrote. He cited several conditions PPL had agreed to, including that it would absorb at least 80 percent of all of the transition costs.
Spirito also rejected concerns raised by the Attorney General’s office and environmental groups that had intervened in the sale.
“With its current operations located in Pennsylvania and Kentucky, PPL does not have experience operating in a state with a comprehensive climate law similar or analogous to the Act on Climate,” Conservation Law Foundation attorney Meg Curran wrote in a post-hearing brief. The Act on Climate is the state’s landmark climate legislation, which set binding emissions reductions targets.
Curran wrote, “PPL has yet to engage in the type of planning necessary to ensure that it can play a constructive role in Rhode Island’s achievement of its [greenhouse gas] emissions reduction mandates.”
PPL argued that the Act on Climate does not include specific requirements for utilities. The company said it would continue existing energy efficiency and renewable energy programs. And part way through the hearing process, the company agreed to several additional commitments, including that it would draft a plan to reduce carbon emissions in the next year.
Spirito took issue with the environmental groups’ arguments that the transfer was not in the public interest.
“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,” he wrote.
And he said that it would be “inappropriate for the Division to sidestep” the state’s Executive Climate Change Coordinating Council, which is charged with implementing the Act on Climate.
The decision was disappointing to Kai Salem, a policy advocate with the Green Energy Consumers Alliance.
“It is true that the Act on Climate specifically does not have anything in the law that refers to the utility company or requires the utility company to do anything. But that was not our argument,” she said. “Our argument was that the Act on Climate requires state agencies to consider emissions reductions in their decision. And it kind of seems like the hearing officer is conveniently forgetting that part.”
She said the approval increases the importance of passing legislation to shift the state fully to renewable energy by 2030.
A spokesperson for the state Attorney General said the office is still reviewing the decision.
There is a 30-day window when the decision can be appealed to Superior Court.