NEES’ plan suggests rate drop

Customers could soon see a drop in their electric rates.
Customers of Blackstone Valley Electric Co. and Newport Electric Corp. can expect to save money on a portion of their electricity bill, if regulators approve New England Electric System’s bid to buy the utilities’ parent company and an accompanying rate consolidation plan. Also, about 250 workers can expect to be offered early retirement packages if the merger wins approval from regulatory officials in Massachusetts and Rhode Island. NEES, which owns Narragansett Electric Co. here in Rhode Island, has proposed buying Eastern Utilities Associates for $634 million. EUA serves about 120,000 Ocean State electric customers.

The rate consolidation plan, which was filed on May 20, proposes lowering BVE and Newport’s rates to bring them more in line with Narragansett’s rates, which are already the lowest in the state. It would also freeze distribution rates for customers of all three companies for up to four years, according to a statement issued by NEES.

The Energy Council of Rhode Island, which represents about 90 of the state’s largest energy consumers, will be watching the proceedings closely, according to Executive Director Roger Buck. As of last week, however, Buck said he had not received a copy of the rate consolidation plan.

“We are in favor of the merger, we think it will prove cost effective. We just want to be sure,” Buck said in an interview last Tuesday.

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There will be benefits to groups such as TEC-RI with one company owning the electric wires throughout the state, he added. There are two other small electric companies in the state: Pascoag Fire District, which serves about 4,000 electric customers, and Block Island Power. TEC-RI collects data about its members’ energy use and negotiates utility deals by combining members in an aggregation pool.

“It (the sale) will make my electricity pool a lot easier, it will be one state, one rate,” he explained.

There are, however, certain issues Buck is concerned about with the merger and rate consolidation proposal.

For instance, he said he will closely review NEES’s proposal for backup electricity costs for organizations that use cogeneration facilities. Cogeneration refers to the practice of using an alternate energy source to produce electricity and heat.

“We think the rates should encourage it, it’s cleaner, and less expensive,” he said. “Those backup rates, they’re only there in case your power fails.”

Buck said his concern is that NEES’s proposal now would lock customers into rates for five years. “We want to be sure we don’t find ourselves without cost effective cogeneration for five years,” he said.

The energy consortium members will also be closely watching how state regulators handle a part of the proposal, which asks that NEES be allowed to charge so called acquisition fees, Buck said. Again though he has not read the proposal, Buck said he was concerned by reports in the Providence Journal that NEES proposed charging customers for some of the costs of the EUA acquisition and another merger with the National Grid Group of England.

“I have a lot of problems with that. Why should we be paying for the costs of the acquisitions?,” said Buck, adding he felt federal regulators should decide this issue.

NEES’s proposed rate consolidation plan, if approved by the state Public Utilities Commission, would take effect within 120 days of the merger’s closing or on April 1, 2000, whichever date comes latest.

For residential customers the proposal would have the typical Blackstone Valley customer save 2.3 percent on the transmission, or wires charge on their bill, according to Mike Ryan, a spokesman for Narragansett Electric. That translates to $1.35 off the current $38.04 charge for using EUA’s wires to deliver electricity.

In Newport Electric’s territory the typical residential consumer, using 500 kilowatt hours of electricity, would save 3.3 percent, or $2.07, off the transmission charge, Ryan said. That would be deducted from the current wires charge of $42.27, he added.

Narragansett customers will see no impact on their bills.

“That’s one of the things we were kind of betwixt and between on. We wanted to bring the Newport Electric rates down even further, but to do that might involve increasing Narragansett customer bills and we didn’t want to do that,” Ryan said.

As for the layoff, Ryan said 250 jobs would be eliminated because of a merger. Most of those cuts would come from the EUA system, which includes Eastern Electric in Massachusetts, he added. EUA now has 869 employees in both Rhode Island and Massachusetts, according to an EUA spokesman.

“There would be a very limited number for Narragansett employees, because we’ve just been through one (employee buyout program),” Ryan said.

EUA shareholders approved the merger on May 17. It still requires regulatory approvals. NEES officials hope the merger approvals will be complete by the first quarter of next year, Ryan said.

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