On Feb. 23, the Rhode Island Division of Public Utilities and Carriers approved the sale of Narragansett Electric Company — National Grid’s electric and gas supplier in Rhode Island — to Pennsylvania-based electric company PPL Electric Utilities. One day later, Rhode Island Attorney General Peter Neronha filed an emergency appeal of the decision in the Rhode Island Superior Court “on the grounds that it does not sufficiently provide assurances that the sale is in the best interests of Rhode Islanders,” according to a Feb. 24 statement.
Following concerns raised by community organizations during the sale’s review process that PPL lacks sufficient experience to further National Grid’s advancements toward green energy and meet state climate goals outlined by the 2021 Act on Climate bill, DPUC approved the $5.3 billion transaction.
Now, as Neronha’s appeal process moves forward, the case has come to represent “one of the first opportunities to uphold the Act on Climate and send some guidance to other state agencies that it is a legal standard that they need to follow,” said Hank Webster, senior policy advocate and Rhode Island director at Acadia Center, a clean energy research and advocacy organization that voiced concerns regarding the sale during the review process.
State climate organizations raise concerns
While upon review DPUC guaranteed that the sale was made in “public interest” — a requirement for the purchase to pass — some environmental groups cited different interpretations of public interest given ongoing climate concerns.
According to Kai Salem ’18, policy coordinator at Green Energy Consumers Alliance, utility companies are essential to the state’s commitment to transition to 100% renewable energy by 2030 through the Act on Climate.
Many community advocates who partook in the review process cited PPL’s lack of experience in green energy as a concern with the sale, given that the company currently only operates in states which lack green energy goals comparable to those outlined by the Act on Climate, Salem said.
“The vast majority of electricity and natural gas in our state goes through the utility systems,” Salem said. These companies “are charged by law with administering most of the green energy plans” in the state. If a company fails to meet these policies, it “could really hamper our ability to meet our climate goals.”
National Grid currently operates in Rhode Island, New York and Massachusetts, “three of the top five states nationally for energy efficiency,” Webster said. National Grid's experience in Rhode Island as well as other states with green energy pathways means that the company has already “lived in that ecosystem” of green energy, he added. Should they maintain control of the state’s power supply, “they can leverage that expertise” to help “decarbonize the utility based systems” in a way PPL cannot.
During the review process, Salem also questioned the company’s ability to meet climate goals without impacting Rhode Island ratepayers. “PPL could gain that experience and expertise," she explained, but the money necessary to provide it “is going to be charged to Rhode Islanders.”
During the review process, National Grid refuted the claim that the transaction could negatively impact the state's ratepayers. In its rebuttal, the company stated that, after analyzing the information supplied by PPL, it is “confident that customers of Narragansett will continue to receive safe, reliable and cost-effective electric and gas distribution service."
In an email to The Herald, Mark Miller, director of communications for PPL, wrote that the company has maintained rates in its present localities that are “31% lower than the average rates in the Mid-Atlantic region” as of the most recent comparison in summer 2021.
Miller also noted that, by investing in the automation of the electrical grid, PPL reduced outages by 30% and incorporated “over 14,600 customer-owned and third party-owned distributed energy resources,” he wrote.
Currently, National Grid is piloting a geothermal network — a project that, according to Webster, would be deeply beneficial to Rhode Island. PPL indicated during the review process that “they have no intention of pursuing that pathway, at least not right now,” which led to concern from local climate activists, he said.
Additionally, PPL would have to continue National Grid’s project of developing technology to blend green hydrogen into distribution heating to help displace natural gas within the Ocean State, Webster said.
Salem also highlighted that Rhode Island has focused on offshore wind power as the main way to reduce carbon emissions, but PPL has no experience with such infrastructure. None of the states in which it currently operates have wind power installations.
In their testimonies during the review process, National Grid and PPL pointed to ongoing collaboration between the two companies as a way PPL will negate concerns regarding its overall experience with green energy. PPL noted that it will leverage the experience “managing energy efficiency programs and programs similar to least-cost procurement in its existing utilities” while taking advantage of the knowledge provided by National Grid employees that will be transferring to PPL.
Miller did not comment on PPL's ability to meet climate goals.
Bringing the sale to court
Margaret Curran, senior attorney at the Clean Energy and Climate Change Program at the Conservation Law Foundation in Rhode Island, noted that because “utilities are a regulated industry, they come under a number of regulatory requirements” that independent businesses do not, necessitating that the state DPUC approve the sale as within public interest.
Curran, who voiced environmental concerns in the review process on behalf of CLF, said that DPUC had a “much more lenient” approach to the case than she anticipated.
“It didn't want to ask a lot of the questions that the Attorney General's office was arguing were necessary," she said, including certain financial information and storm response plans.
For Curran, DPUC’s decision to uphold the sale despite widespread public criticism only further demonstrated the current division’s hands-off approach, which she said does not meet the expectations of community stakeholders. “The Hearing Officer seemed to view the Division's role in overseeing this interaction as very light-touch,” she said, suggesting that the DPUC only worried about the utility being in “good financial order.”
The Climate and Development Lab at Brown University also raised concerns regarding PPL’s knowledge of offshore wind supply, according to J. Timmons Roberts, professor of environmental studies. Roberts alleged that DPUC’s “historical focus is about low rates and reliability above all else.”
In Neronha’s March 23 opening brief to the Superior Court, he alleged that DPUC “expressly denied the statutory command to consider climate impacts of the transaction, as it must in all its decisions, enacted by the legislature in its adoption of the 2021 Act on Climate.”
While we are “confident the Division’s decision will be upheld, we also understand that this is a complex transaction and recognize the Attorney General’s commitment to ensuring Rhode Island customers will not be impacted by it,” wrote Ted Kresse, director of strategic communications at National Grid, in an email to The Herald.
Thomas Kogut, DPUC associate administrator, wrote in an email to The Herald that DPUC is unable to comment on the review process as it falls within its current legal proceedings at the Superior Court.
Setting a precedent for the Act on Climate
The Act on Climate set legally enforceable emission reduction requirements for state energy companies. But, according to climate activists, even though DPUC’s approval of the purchase came on the condition that PPL would eventually meet these goals, it did not satisfactorily outline steps to do so. That represents a potential limitation of the bill in ensuring that businesses uphold state climate goals prior to gaining control of state energy resources.
According to Webster, the focus on “the company’s willingness to commit to meeting targets without any specifics around how they plan to do that” could set a dangerous precedent for companies entering the review process with promises they might be unable or unwilling to act on later.
During the review process, PPL released a list of seventeen methods to meet state climate goals. The document promises that PPL will “submit a report to the Division within 12 months of the transaction closing on its specific decarbonization goals for Narragansett to support the goals of Rhode Island’s 2021 Act on Climate.” But Webster said their language was too abstract to verify with confidence.
In its rebuttal testimony, National Grid said the Act on Climate does not place any immediate requirements on public utilities and that “compliance with future rules or regulations implementing the 2021 Act should be addressed in a separate forum and not as a condition of approval of the transaction."
Amid these disagreements on the implementation of the Act on Climate, Curran suggested that businesses within the state might look to the result of the ongoing hearing when interpreting how they will meet the requirements of the bill moving forward. The resistance toward incorporating the Act on Climate in decisions “comes from entrenched economic interests that are fighting pretty hard not to have those changes put into place, because it means they will have to substantially change much of the business that they have been doing,” she said.
“Although it is frustrating that this is happening, it demonstrates the power of the Act on Climate and how important it is to have legally binding climate mandates because it allows us to use the court system to enforce it,” Salem said.
On April 1, the Superior Court ruled in favor of Neronha's appeal and scheduled a subsequent oral argument held Tuesday, suggesting DPUC failed to “adequately consider the environmental impacts of the transaction in accordance with the 2021 Act on Climate” in its initial approval.
After the oral argument, the Court will provide a final decision and community members will have one more opportunity to contest the sale. According to Curran, both the Attorney General and PPL could decide to take the matter to the Supreme Court.
If the sale moves forward, Curran thinks there is still room for optimism about PPL’s ability to meet climate goals.
“Maybe we will be pleasantly surprised by PPL. They actually have done some interesting work in Pennsylvania and have actually done more work than National Grid in putting up advanced metering functionalities,” she said. “Maybe this is a utility we can work with.”
According to Miller, PPL is “excited about the prospect of serving the energy needs of Rhode Islanders as well as partnering with the State to achieve its decarbonization goals.”
While Webster is less confident about PPL's ability to meet state climate needs, he noted that the Acadia Center is “committed to help PPL advance the clean energy future.” But first, he added, the organization wants “the state to conduct a thorough review of all the elements of that clean future that we need to address.”