Having announced in June that he would intervene in the Public Utilities Commission’s consideration of Narragansett Electric’s request to raise its electricity distribution rates by nearly 30 percent, Attorney General Patrick C. Lynch announced today that he has intervened in the PUC’s examination of the issue, included in Docket No. 4065, this week.

On Tuesday, Lynch’s ratepayer advocate, Special Assistant Attorney General Ladawn S. Toon, testified to Lynch’s opposition to the utility’s proposed 29 percent distribution rate hike, which would result in upping the average ratepayer’s monthly bill by about 11 percent. If approved by the PUC, the rate hike would result in a standard customer paying $8.95 more a month on his or her bill.

“In the context of our state’s strained economy and on behalf of Rhode Islanders who have been battered by job losses, shrinking wages and the soaring costs of fuel, prescription drugs, health-insurance premiums and so many essential household expenses, I think it’s more than appropriate to examine the necessity of this proposed rate hike,” Lynch said.

He added: “Although I appreciate the actions it took in previous years of this decade to hold distribution rates level, there is little question that Narragansett Electric has been and remains profitable. It is making money. There also is little question that its parent company, National Grid, is making money. There is no question, however, that most of Narragansett Electric’s customers, and certainly all of its low-income customers, are vulnerable and are suffering in this economy. Yet, Narragansett Electric has proposed a rate increase that is drastic. The proposal seems to lack awareness, let alone appreciation, of the hardships that Rhode Islanders are experiencing. At the very least, the term ‘tone deaf’ comes to mind. My office will fight to ensure that any increase that may be granted is thoroughly scrutinized, is just and is reasonable, although no increase will be palatable to most ratepayers.”

The Attorney General’s Office routinely represents the Division of Public Utility Carriers (DPUC) in PUC rate hearings and is doing so in the pending docket hearings, which began Monday with public comment. The chief of Lynch’s PUC Unit, Assistant Attorney General Leo Wold, is the DPUC’s legal counsel. Lynch, however, also assigned an additional attorney from his Civil Division, Special Assistant Attorney General Toon, to “advocate for ratepayers’ interests,” he said, at the Docket No. 4065 hearings.

Yesterday, Toon explained the rationale behind what Lynch called his “strenuous opposition” to another component of the docket, “revenue decoupling.” Revenue decoupling is a ratemaking method that severs the link between a utility’s projected revenue requirements and its sales levels.

“In theory, it sounds good because it may stabilize a utility’s revenue stream, which could mean that there aren’t as many wild swings up or down, based on market factors, in consumers’ monthly utility bills,” Lynch said. “Still, consumers will end up paying more, and it’s by no means clear that they will benefit from decoupling as much as the utilities.”

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AG Lynch intervenes in Docket No. 4065 Page 2 of 2 11/05/09

“When The Wall Street Journal praises an idea, you have to wonder how friendly the idea is to consumers,” he added.

Lynch was referring to a Feb. 8, 2009, article that ran in The Wall Street Journal whose headline, “Less Demand, Same Great Revenue,” alluded to the “Tastes Great, Less Filling” slogan of Miller Lite beer’s long-running advertising campaign. The lead of the article reads, “It isn’t easy to get utilities to promote energy efficiency, and for good reason: When people use less electricity, utilities usually lose revenue.”

Lynch said he opposes decoupling, particularly if it is implemented without well thought-out and meaningful consumer protections, because it is regressive and it rewards utilities with a guaranteed profit in exchange for the energy-conservation measures that consumers make.

“When a ratepayer makes an environmentally conscious decision to turn down the thermostat, turn off the lights or buy energy-efficient light bulbs, the ratepayer should be rewarded with lower energy bills. The utility shouldn’t be rewarded with guaranteed compensation because of the consumer’s initiative,” said Lynch. “Basically, decoupling transfers the fruits of the ratepayers’ efforts to the utility. That’s not right.”

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