BIPCo files its rate case

Thu, 10/03/2019 - 5:45pm
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On Sept. 30 the Block Island Utility District submitted its new rate case to the Rhode Island Public Utilities Commission. If accepted, it will be the first time since 2008 that Block Island ratepayers will see a change in the overall rate structure. The RIPUC will have up to nine months to consider the changes, including public hearings. At 275 pages, it’s a lot to unpack, and The Block Island Times will be doing just that in the upcoming months. For now, we will present an overview and a few highlights.

The Utility District acquired the assets, and the name, of the Block Island Power Company in March, converting the formerly privately-held company to a ratepayer-controlled not-for-profit. This change in corporate structure has resulted in savings of over $700,000 per year for the utility, and as a result the new rate case is “revenue neutral” meaning the total monies collected will remain the same.

There will be some shuffling among classes of ratepayers based upon a cost-of-service study and most significantly, instead of two seasonal rates, there will be three. This applies to the plant and distribution charge only, one of the three basic components of one’s electric bill. (The other components are the monthly customer charge and the Standard Offer Charge, a pass-through charge based upon the price that BIPCo pays for the energy itself.)

Instead of paying one rate from October through May, and a higher rate from June through September, the months of May, June, September, and October will be included in a “shoulder rate,” with rates somewhere between the winter and summer rates. Under the proposed rate design, the peak rates charged in July and August will go up and the winter rates will go down, across all rate classes.

Overall there are fewer classes of ratepayers. Gone will be the residential demand rate, an increased rate that is triggered when a customer pulls too much power from the system within a short period of time. BIPCo President Jeffery Wright has often said this is the rate class that he receives the most complaints about. Customers essentially feel punished for turning on too many high-powered appliances or tools within a 15-minute period.

There will also no longer be a “public authority” rate. Municipal buildings will now pay the same rates as other non-residential, “General” customers, depending on their load.

When the Utility District purchased the assets of BIPCo in March, for $5.8 million, it did so with a short- term loan. This summer that debt was converted to long-term financing at a rate that was more favorable than anticipated. This was after most of the budgeting and cost analysis for the rate case had been finalized and suddenly resulted in a surplus of revenues over expenditures. Under the proposed rate case, anticipated savings of up to $400,000 per year will be set aside into a restricted Voltage Conversion Capital Fund.

As many know, the distribution system has been limping along for years, and presently there are two main circuits that are at full capacity during the summer months. This is a complex, long-term project. In Wright’s testimonial portion of the rate filing he writes: “At this time, a budget has not been fully developed and therefore is not factored into this rate case with the exception of proposing that any rate surplus is applied to a restricted fund intended to fund the engineering and initial project development. Any short-term capital work will be coordinated with the future voltage conversion steps in mind.”

One last highlight of the rate proposal is the inclusion of an energy efficiency program. The budget for this program is $120,000 per year with $60,000 coming in the form of a grant from the R.I. Office of Energy Resources, and the remainder from a dedicated charge on the power bills. Customers will be charged one cent per kilowatt hour used during July and August, and $0.00395 per kwh during the shoulder season.

The details of the program have yet to be worked out and BIPCo is working with OER to develop the program. The proposed program should be available by the end of this year and will be submitted to the PUC in a separate docket.

The next steps will involve the PUC developing a procedural schedule, which will be posted on its website, along with the full text of the proposal. As stated previously, they can take up to nine months to consider, change, hold public hearings, and approve the proposal. The Utility District hopes to have the new rates go into effect June 1 of 2020.