By: Rebekah de la Mora, Policy Analyst
On February 23, the Rhode Island Division of Public Utilities and Carriers officially approved National Grid's sale of the Narragansett Electric Company to PPL. This would put Narragansett's 780,000+ customers under the care of PPL, adding to their current 2.7 million customers. The attorneys general of both Rhode Island and Massachusetts then submitted motions to their respective supreme courts, asking for a halt to the sale. On March 3, the Supreme Judicial Court of Massachusetts halted the sale, on the grounds that the sale may need a full regulatory proceeding and approval in Massachusetts to review its impact on ratepayers. National Grid and the attorney general later reached a settlement agreement. Now, the case in the Rhode Island Superior Court is under way. The Rhode Island attorney general is arguing that the review of the sale did not take ratepayer impact or compliance with the new climate law into account.
The sale, however, is not the only thing put on hold. Many regulatory proceedings in Rhode Island related to Narragansett's programs have been on hold since the sale was proposed last year. Regulators want clarity on who will be running Narragansett before making decisions on any of the utility's programs. And, as mentioned above, many are concerned that PPL's practices will not fall in line with Rhode Island's new 2021 Act on Climate, which set emissions reduction goals to achieve economy-wide net-zero emissions by 2050.
Saying with 100% certainty whether PPL could meet the Act on Climate is impossible; the future is not so precise as that. A more reasonable question would be is PPL able to meet the Act -- as opposed to will PPL meet the Act. Looking at current expectations and previous actions, one can compare the ability of PPL to align with the state's climate law.
State Clean Energy Targets
First, what are the climate goals that have been set? Rhode Island's 2021 Act on Climate defined new emissions reduction goals, based on 1990 levels: a 10% reduction by 2020, 45% by 2030, 80% by 2040, and 100% by 2050. Pennsylvania has an executive order from 2019, based on 2005 levels: a 26% reduction by 2025, and 80% by 2050. Kentucky's 2011 Climate Action Plan, based on 1990 levels, recommended a 20% reduction by 2030. In addition, Rhode Island and Pennsylvania both have renewable portfolio standards in place. Pennsylvania's standard reached its final target in 2021 with an 18% requirement; Rhode Island's 2021 requirement was 17.5%, but the standard will reach its final target in 2035 at 38.5%. Comparatively, Rhode Island's goals are more stringent than the other two states, which means PPL's current climate actions would have to be revised to meet Narragansett's requirements.
Utility Clean Energy Targets
Along with government-mandated goals, National Grid and PPL have their own in-house emissions reduction targets. National Grid's, based on 1990 levels, are: a 20% reduction by 2020, 80% reduction by 2030, 90% by 2040, and 100% by 2050. PPL's, based on 2010 levels, are: a 70% reduction by 2035, 80% by 2040, and 100% by 2050. While the base years differ, PPL's percentages over time are more stringent than Rhode Island's state targets, and it still has a 100% net-zero target for 2050 like Rhode Island does. PPL's climate actions would, eventually, align with Rhode Island's goals, even if exact percentages reached over time weren't identical.
Emission Reductions to Date
Requirements and expectations, however, are not the same thing as action. So, second, how well are the utilities' achieving these goals? How much have they already reduced their emissions? National Grid reduced its emissions by 70% in 2020 based on 1990 levels, and PPL reduced its emissions by 59% in 2020 based on 2010 levels. While National Grid has demonstrated more progress and more ambitious targets, PPL's advancement is still well in line with both its internal 70% by 2035 target and Rhode Island's 45% by 2030 goal.
Other Issues
Overall, it cannot be said that PPL is wholly incapable of meeting Rhode Island's standards. Although the utility has less aggressive emission reduction targets, they are not low when compared to most utilities across the country. It is perhaps a lower score compared to National Grid, but it is not a low score in and of itself. That being said, meeting climate goals is not the only job of a utility. Other issues have been raised throughout the sale which could affect the performance of Narragansett -- for example, some concerns relate to storm response and resiliency.
As the smallest state in the US, Rhode Island has limited in-state resources when it comes to emergencies, e.g. power outages from snow storms or hurricanes. Under National Grid, Narragansett is able to take advantage of contiguous operations in Massachusetts and New York, sharing resources and labor in an emergency. It would not be able to do that to the same extent under PPL, which operates in Pennsylvania and Kentucky; additionally, weather-based emergencies in Pennsylvania and Kentucky are not the same as weather-based emergencies in Rhode Island, Massachusetts, and New York.
PPL, on the other hand, argues that the distance would be a benefit. The distance between the service territories would mean that Rhode Island would not have emergency events at the same time as the rest of PPL's territory; generation plants in Pennsylvania and Kentucky would not be affected by the emergency, and resources could be fully allocated to Rhode Island without needing to split between the three states. The trade-off, then, would come down to how easily Rhode Island can take advantage of another state's resources: National Grid would require competition with other services territories but shorter wait times, while PPL would require longer wait times as labor and resources are moved across the Northeast but without competition.
How the pieces will fall is yet to be determined. A hearing was held on April 12 for oral arguments in the Rhode Island court case, and no other hearings are scheduled. The court is expected to make a decision with the current information, but when that will be is unknown.
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