RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION
S2202 would require the Rhode Island Public Utilities Commission to adopt, on an annual basis, a standardized or “generic” financing methodology for regulated utilities. The commission would use that methodology to set an authorized common equity ratio and a single authorized rate of return on equity (ROE) for electric distribution companies, gas companies, water utilities, and other utilities under its jurisdiction, unless a different result is specifically justified. The bill also requires the commission to reconcile prior authorized ROE levels with actual results and to use a true-up mechanism when appropriate.
The bill further provides that if a utility earns more than its authorized ROE, the excess must be returned to ratepayers through a surcredit in the next rate period; if it earns less, the commission may allow recovery through a surcharge. It also requires the commission to publish its methodologies and calculations, provide notice-and-comment opportunities, and include participation by ratepayers, consumer advocates, public interest groups, utilities, and other interested parties. Utilities would retain the right to challenge the commission’s authorized values, but the burden would be on the utility to prove the values are inadequate to maintain financial integrity, attract capital, or provide a fair return.
This bill would add a new section to chapter 39-1 of the General Laws governing the Public Utilities Commission, creating a more structured statutory framework for setting utility capital structure assumptions and ROE in rate cases. It would affect regulated electric, gas, water, and other public utilities by standardizing how the commission determines allowed returns and by establishing automatic mechanisms for sharing over- or under-earnings with ratepayers. The bill also increases reporting obligations for the commission and requires public disclosure of the underlying data and analysis. The act would take effect on July 1, 2027.
The available committee vote suggests the bill was received favorably at the Senate Commerce Committee level, with a 7-0 vote to hold it for further study rather than a recorded opposition vote. That indicates interest in the proposal but also a desire for additional review before advancing it. No transcript excerpts are provided, so the broader discussion cannot be measured directly, but the structure of the bill suggests a policy focus on transparency, ratepayer protection, and regulatory consistency.
The main points of contention are likely to center on how much discretion the Public Utilities Commission should retain versus how much should be locked into a standardized methodology. Consumer advocates and ratepayer interests would likely support the bill’s transparency requirements, true-up provisions, and preference for ratepayers’ best interests, while utilities may object to a single ROE framework, mandatory surcredits for over-earnings, and the burden placed on utilities to rebut the commission’s determinations. Another likely issue is whether a generic methodology can fairly account for differences among utilities, market conditions, and financing needs.