Energy Legislation Not as Advertised


As part of my role reading legislation for the Legislative Freedom Index, which the RI Center for Freedom & Prosperity initiated, I took a look at Lieutenant Governor Dan McKee’s package of bills, which he’s branded as “Ratepayer Protection,” and which he promotes in an op-ed in today’s Providence Journal.  Hopefully I’m not alone in thinking the op-ed’s headline might be misleading:  “Let’s cut energy bills in Rhode Island.”

McKee claims that the first bill would generate a significant amount of competition by increasing ratepayers’ access to more energy suppliers through National Grid’s distribution network.  But all it really does is force National Grid to make standardized, regular supplier payments that don’t correspond on a regular basis with the actual money collected.  That money has to come from somewhere.

The second bill gives the state government more power to micromanage and regulate the customer service of energy distribution companies.  To the extent that this will actually improve customer service, and not just create jobs for bureaucrats, it will still have a cost.  Again, where is that money going to come from?

Oddly, McKee doesn’t even mention three other bills that are part of his legislative package.  One of the others would force National Grid to include incentive payments it receives in its rate calculation.  That may have been too complicated to explain in an op-ed, but another bill would actually prevent National Grid from investing in infrastructure with money from ratepayers, which is foolish.

A last bill actually brings attention to a running problem for ratepayers — by allowing the “decoupling” of revenue from energy sales, which means that National Grid might not be able to automatically increase its rates to maintain its revenue even when its sales go down (because of consumer habits, efficiencies, or whatever).  Right now, when one household or business finds ways to lower its energy costs, National Grid merely passes the bill on to every other energy user. “Decoupling” would allow energy costs to go down for the state as a whole.

Unfortunately, the legislation merely allows state regulators to consider the possibility, but even so, it’s difficult to understand why the bill that has the most potential to lower energy costs didn’t make it into McKee’s op-ed.

Just so, we’ll know politicians are serious about improving things in Rhode Island when they start challenging the assumptions of big government micromanagement through regulation.