Electric grid sale presents rare opportunity for Rhode Island, clean energy advocates say

by Lisa Prevost, Energy News Network

As the sale of Rhode Island’s largest electric distributor comes before state regulators for approval, a group of solar developers, policy specialists and energy consultants are calling on the governor and attorney general to seize what they see as a golden opportunity to force a faster grid transition. 

In an April 26 letter to Gov. Daniel McKee and Attorney General Peter Neronha, the 14 clean energy advocates argue that the state’s existing electric distribution system is “antiquated,” and that Narragansett Electric has so far neglected to invest in a modernized grid that can adequately serve the rapid growth in solar and other renewables. 

Now, with Pennsylvania-based PPL Corp. seeking approval of its acquisition of Narragansett, officials in the state’s highest offices are in a position to take action, advocates said. They want officials to insist, as a pre-condition of approval, that PPL present specifics as to how it will enable the state to meet its commitment to achieving 100% renewable energy by 2030 and, under the Act on Climate, net-zero emissions by 2050.

“The sale of a distribution company is a rare occurrence,” said Kenneth Payne, a former senior policy adviser to the state Senate and the lead signatory. “But it is a time when you can really say, ‘Let’s plan for what we need prospectively, rather than just doing what we did in the past.’ It is appropriate for PPL to be asked to lay out how they plan to approach managing distributed energy resources.”

PPL announced in March that it had agreed to acquire Narragansett from its parent company, National Grid, in a transaction valued at $5.3 billion. At the same time, PPL is selling its U.K. subsidiary, Western Power Distribution, to National Grid for £7.8 billion.

Based in Allentown, Pennsylvania, PPL owns utilities providing electricity to about 2.5 million customers in Pennsylvania and Kentucky, and natural gas to about 300,000 customers in Kentucky. 

Narragansett distributes electricity and natural gas to about 780,000 customers in Rhode Island. 

PPL and National Grid have filed a petition with the Rhode Island Division of Public Utilities and Carriers seeking approval of the sale, as required by state statute.

Solar developers in Rhode Island and Massachusetts have been at odds with National Grid over soaring costs and lengthy delays associated with connecting large-scale solar projects. Developers complain that they are being charged for the full cost of the infrastructure upgrades required to connect to the grid, without any consideration given to the benefits their projects deliver to the system as a whole.

“National Grid has the attitude that, ‘You want to mess with my wires — you’re going to have to pay for it,’” said Rick Sellers, a consultant with a long history in renewable energy and another of the signatories.

But the company has maintained that the energy projects that spark the need for upgrades should be responsible for the costs, and that those costs shouldn’t be shared with ratepayers, “who are already supporting renewable energy development through their electric rates.”

The advocates argue in their letter that the sale of Narragansett should represent “a turning point to a serious transition to achieving our clean energy future,” and that PPL should be held accountable for strategic modernizing of the grid, prioritizing in-state clean energy generation, expediting interconnection permitting, and enabling energy storage.

Gov. McKee’s office, asked for comment, released a statement saying his team will be monitoring the vetting of the sale “to ensure that Rhode Island ratepayers’ interests are protected and that the new entity, if approved, is a collaborative partner on our clean energy policy goals and statutory obligations in the Act on Climate law.” 

Attorney General Neronha, while not responding directly to a question as to whether the acquisition presents an opportunity for grid modernization, said through a spokesperson that his office is supportive of the state’s efforts to mitigate climate change, and  “will continue to closely review the proposed sale of Narragansett Electric to PPL Corporation, as we recognize its importance to Rhode Islanders.”

Rhode Island is an ideal sandbox for grid transformation, advocates say. It’s small, and one utility dominates the market. It has a growing renewable energy sector, and strong regional power sector innovation. And meeting the standards under the recently passed Act on Climate will require reform of the whole electric distribution system, Payne said. 

“But it requires an ask,” he said. “If you don’t ask, why should they do it?”

Karl Rábago, an energy consultant based in Denver who previously served on the Texas Public Utility Commission and is a frequent expert witness in utility regulatory proceedings, said advocates are right to push state officials to extract commitments from PPL at this moment. 

A transaction such as this is something of “a Christmas tree,” he said. “They don’t happen that often, and they are a leverage moment for the cast of stakeholders. If you don’t get your ornament on the tree, then shame on you.”

If no commitments are made prior to approval, it’s very likely interconnection issues will become worse before they get better because PPL and Narragansett will be much more focused on integrating the two company cultures over the next two years, Rábago said.

He said PPL does not stand out as a national leader in solar or grid modernization. Its Kentucky generating subsidiaries have an energy portfolio dominated by coal and gas. And its corporate commitment to reduce carbon emissions at least 80% (from 2010 levels) by 2050 is behind much of New England, he said. 

So when PPL makes claims about its intention to improve the distribution system for clean energy, “the question that the governor and regulators should be asking is, why should I believe you?” Rábago said.

Mark Miller, PPL’s director of communications, said the company is “uniquely qualified” to support Rhode Island’s decarbonization goals. The company’s Pennsylvania subsidiary, PPL Electric Utilities, which distributes power to about 1.4 million customers, has made significant investments in grid automation over the past decade, such that outages were down 30% in 2020 compared to 2010, he said. 

“Our efficient and effective management of overall operations has allowed us to make these significant investments in grid modernization for the benefit of our customers without increasing operational costs and while maintaining affordable rates for our customers,” Miller said.

PPL Electric is currently testing how to proactively manage smart inverters that convert the current coming from customer solar systems, he said. The converters can work autonomously, but the company intends to demonstrate that managing them from a centralized system will improve reliability, power quality and hosting capacity, he said. 

That plan raised alarms when it was first proposed in 2019. PPL originally petitioned state regulators to allow it to require all customers applying to hook up a new solar system to install company-approved smart inverters and devices that would allow PPL to monitor and proactively manage the power source. 

Solar developers and clean energy advocates quickly pushed back, concerned that the company could use the devices to curtail generation.

“We started out with the company in a pretty adversarial stance,” said Mark Szybist, a senior attorney with the Natural Resources Defense Council, which, along with the solar company Sunrun, opposed the plan. “We didn’t think that the value proposition for these devices had been proven.”

The opposing sides reached a settlement late last year. In a three-year pilot program, some solar customers will have smart inverters actively managed by PPL, and others will have autonomous smart inverters. The pilot will measure the costs and benefits of both approaches. 

The utility would need separate approval to roll out a similar program in Rhode Island. They have asked state regulators to approve the purchase of Narragansett by Nov. 1, the start of heating season. 

This article first appeared on Energy News Network and is republished here under a Creative Commons license.

Source: Renewable Energy