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Moore: National Grid Rate Hike Results From Bad Policy

Monday, August 07, 2017

 

Lieutenant Governor Dan McKee is leading the fight against the rate hike.

Rhode Islanders experienced some serious sticker-shock when they heard the news that National Grid, the state’s dominant electricity provider, was seeking a 53-percent rate hike.

The company is seeking to raise cost of a kilowatt hour from from 6.3 cents to 9.5 cents. The average rate payer will be looking at an roughly 15 bucks per month more in costs.

There are two components to National Grid’s billing mechanism. The first is the cost of the power, which the company is seeking the Public Utility Commission’s approval to hike. National Grid does not profit from the cost of the power.

The other aspect to the bill is the bill is the delivery charge. The company isn’t seeking an increase in the delivery aspect of the bill. That portion of the bill is where the company makes it profits.

Rhode Islanders are, rightfully, encouraged to do all they can to conserve energy. We are told to turn off appliances we are not using, when possible. We use energy efficient light bulbs.

Yet here’s what’s ironic and counterintuitive about the state’s energy policies, particularly when it pertains to National Grid. When a customer does the right thing and adopts a green, energy efficient lifestyle, he or she will be using less power, therefore helping the environment. You would think that we would be rewarded when we collectively take those types of actions.

WRONG!

Instead, we’re penalized. When the company is delivering less energy, it is making less money. That’s a factor of why costs increase. To make up for the loss of revenue, the company is then forced to raise prices.

Customers, at least financially, are disincentivized from conserving electricity. Instead of crafting policies that incentivize conservation, we, I assume inadvertently, have policies that penalize us for doing the right thing.

It’s not much different than our mechanism to fund RIPTA. The state uses the gas tax to fund RIPTA. When more folks opt to take a RIPTA bus instead of driving, the state garners less revenue to fund RIPTA. That leads to more tax hikes.

It’s a broken system that will take big ideas and a move away from our constant state of myopia to reform.

Perverse Invetives

Let’s give some credit to Lieutenant Governor Daniel McKee for taking the lead on fighting the latest National Grid rate hike.

“The rate increase, that’s being proposed, is not going to impact all of the small businesses in out there in our 39 communities but also all of our residents,” McKee told GoLocal Live this week.   

McKee deserves credit for helping lead the fight to do away with so-called billing adjustments, which penalized folks who switched energy providers, leaving National Grid for a competitor. He is also encouraging ratepayers to shop around for a better deal on their electricity rates.

Hopefully the state regulators will find a way to scale back this monstrous rate hike. That would provide us with some short term relief. But what we really need is some drastic reforms that incentivize us to reduce our energy consumption, not penalize us.

Russell J. Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected]. Follow him on twitter @russmoore713.

 

Related Slideshow: The 15 Costliest Government Programs in RI

Prev Next

#15 Non-Highway Transport

Category: Transportation

Cost Per $1,000 of Income: $4.87

National Rank: 4

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#14 Community Development

Category: Environment and Housing

Cost Per $1,000 of Income: $4.97

National Rank: 12

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#13 Sewage & Solid Waste

Category: Environment and Housing

Cost Per $1,000 of Income: $5.09

National Rank: 36

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#12 Health & Hospitals

Category: Social Services

Cost Per $1,000 of Income: $5.40

National Rank: 49

Prev Next

#11 Other Ed. & Libraries

Category: Education

Cost Per $1,000 of Income: $6.00

National Rank: 12

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#10 Fire

Category: Public Safety

Cost Per $1,000 of Income: $6.50

National Rank: 2

Prev Next

#9 Highways

Category: Transportation

Cost Per $1,000 of Income: $7.66

National Rank: 48

Prev Next

#8 Police

Category: Public Safety

Cost Per $1,000 of Income: $7.87

National Rank: 13

Prev Next

#7 Utilities

Category: Utilities and Liquor Stores

Cost Per $1,000 of Income: $9.25

National Rank: 40

Note: Utilities are not considered to be "direct general expenditures." Instead utilities are categorized as "other direct expenditures." The category is a U.S. Census Bureau term. Unlike some states, Rhode Island does not have state-run liquor stores.

Prev Next

#6 Gov't. Administration

Category: Administration and Debt Interest

Cost Per $1,000 of Income: $11.05

National Rank: 16

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#5 Interest on Debt

Category: Administration and Debt Interest

Cost Per $1,000 of Income: $12.13

National Rank: 3

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#4 Higher Education

Category: Education

Cost Per $1,000 of Income: $13.59

National Rank: 45

Prev Next

#3 Pensions and Other

Category: Insurance Trust

Cost Per $1,000 of Income: $39.62

National Rank: 4

Note: Other than pensions this area of spending includes unemployment security, disability insurance, and workers compensation. Together, these expenses are categorized U.S. Census Bureau as "insurance trust."

Prev Next

#2 Public Welfare

Category: Social Services

Cost Per $1,000 of Income: $46.90

National Rank: 7

Prev Next

#1 Elementary and Sec. Ed

Category: Education

Cost Per $1,000 of Income: $48.59

National Rank: 15

 
 

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