Dear Neighbors:
I hope you are looking forward to this afternoon’s big football game, and you are ready for our developing snowstorm. In this week’s letter, I will offer some preliminary thoughts about the utility “affordability” components of the Governor’s budget.
A. The Tension Between Affordability And Sustainability
In last week’s letter, I described how some provisions in the Governor’s budget create tension between the goals of affordability and sustainability. At first glance, the budget’s energy “affordability” proposals appear to produce same type of tension; in this case between rate relief and environmental sustainability. With that said, I believe there is much more to study and learn about how renewable energy advances the goal of affordability in the short, medium and long term.
B. The Governor’s Proposal To Reduce Distribution Rates
We can review our own energy bills to begin understanding the Governor’s proposal. Those bills have two major components, namely supply and distribution. On my own most recent electric bill, for example, supply was $77.48 and distribution was $96.94. The Governor’s budget proposes scaling back renewable energy initiatives in order to reduce charges on the distribution side which, according a recent Rhode Island Current article, would save the typical rate payer $15/month. The General Assembly will review the Governor’s budget, and the final budget likley will be passed and signed sometime in June.
C. The Role Of Renewable Energy In Electricity Supply Rates
To understand how costs are set on the supply side for electricity, I encourage you to view Senator Whitehouse’s short video. He notes that electricity generation costs from fossil fuel plants are typically higher than from renewable energy sources. For instance, I have been informed that the nearly complete Revolution Wind project will generate electricity at 9.8₵ /kilowatt hour, compared to 14.77₵ /kilowatt hour for excess capacity natural gas generation currently available, a savings of more than 33%. For that reason, we can expect significant savings in our electricity bills when Revolution Wind (which is expected to serve 350,000 Rhode Island customers) comes online. For a purely hypothetical example, if the electricity supply cost fell by 20%, my most recent bill would go down by more than the average expected $15 from the Governor’s distribution-side budgetary proposals. I do not know if my electric bill is typical of other Rhode Islanders, but I plan to learn more about this issue.
Renewable energy requires capital costs and development time before coming online, but in the case of Revolution Wind, those costs and construction time are close to completion. If Revolution Wind comes online prior to the June passage of the budget, we may see tangible supply-side affordability benefits caused by greater use of renewable energy. That experience may support further consideration of the tradeoff between short-term rate relief and the possibility of lower energy costs in the medium and long term.
D. The Two Senate Study Commissions
The Senate established two study commissions to learn more about these issues in order to promote the development of best policies and practices.
1. The Act On Climate Commission
I am Chair of the Act on Climate Commission. Our first meeting is this Wednesday, January 28 at 4:00 p.m. in State House Room 212. We will hear a presentation from DEM Director Terry Gray concerning the Climate Action Strategy published three weeks ago by the Executive Climate Change Coordinating Council (EC4), before the Governor presented his proposed budget.
2. The Renewable Energy Commission
In addition, Senator Sosnowski (who serves on the Act on Climate Commission) is the Chair of the Senate’s Renewable Energy Commission. It is my hope that both commissions can work together to gain the best possible understanding of the policy issues regarding renewable energy and the implementation of the Act on Climate.
E. The Thank You Reddit John Fund
Finally, I would like to share news about an initiative by our City Council members Jill Davidson and Sue Anderbois to honor the efforts of Reddit John, the homeless person who provided police with the information needed to identify the Brown University shooter. They created a fund to support the Open Doors homeless aid program in Reddit John’s honor. You can learn about and support their project by clicking on this link.