Seven Ways the State Makes Your Electric Bill More Expensive

LIHEAP Charge

Charge: $.73 a month

Explanation: This monthly charge is billed to all customers as required by Rhode Island law. The amounts collected through this charge are used to provide funding for the Low-Income Home Energy Assistance Program (LIHEAP) Enhancement Plan, created to supplement the Federal LIHEAP funding being received by customers of Rhode Island electric and natural gas distribution companies. LIHEAP assists low-income households primarily in meeting their home energy needs. By law this charge may not be more than $10 per year for each electric or natural gas service account. This charge is subject to change on an annual basis after review and approval by the Rhode Island Public Utilities Commission.

- National Grid’s Glossary of Terms on Your Bill 

Read more about the program.

Energy Efficiency Program

Charge: 0.983¢/kWh (kilowatt hour)*

Explanation: According to National Grid, this charge is used to fund energy efficiency programs the company offers. However, these are programs that are offered through the state. The state Office of Energy Resources provides incentives and loans to enhance energy efficiency in homes, businesses, and cities and towns. According to this office, “The energy efficiency programs are supported by a surcharge on electric and gas customers’ bills, and program administration is provided by National Grid.” A second state agency, the Energy Efficiency Resource Management Council works with the Office of Energy Resources to help National Grid with the “implementation and development of the annual energy efficiency programs.”

*Note: This rate actually consists of two charges. One is the Energy Efficiency Programs Charge of 0.953¢. The other is a Renewables Charge of 0.03¢.

Read the applicable state law here. Read more about the program here. 

Renewable Energy Charge

Charge: .512¢/kWh (kilowatt hour)*

Explanation: National Grid must charge customers an additional charge to comply with a state law that mandates that the company purchases electricity from renewable sources. Companies can also comply with this mandate by buying what are known as Renewable Energy Certificates (RECs), which fund “the development of renewable electric generational resources,” according to National Grid. National Grid opts for the RECs. The additional cost is listed as the Renewable Energy Charge on a homeowner’s electric bill. (The applicable state law is Rhode Island General Laws 39-26-1.)

Read the state law here. 

*Note: This rate represents what a typical customer would have paid in spring 2014. The updated rate was not available in time for publication.

Distribution Charge

Renewable Energy Distribution Charge

Charge: (0.024¢)/kWh (kilowatt hour)*

Explanation: The actual cost of purchasing renewable energy is split into two areas of the bill, delivery services and supply services. The Renewable Energy Charge discussed in the previous slide is listed under supply services. The Renewable Energy Distribution Charge, on the other hand, is listed under delivery services. It is part of the same state mandate discussed in the previous slide. 

*Note: Normally this would be a charge for customers. However, it is currently a credit because National Grid over-collected from customers. 

Gross Earnings Tax

Charge: 4%

Explanation: The gross earnings tax is a revenue-generating tax the state levies on all electric customers. Both homeowners and businesses are subject to the tax. 

Sales Tax

Charge: 7%

Explanation: This is an additional tax paid on electricity bills. It applies only to businesses and only those that are not manufacturers, according to Paul Dion, the Chief of the state Office of Revenue Analysis

Renewable Energy

Renewable Energy Growth Program

Charge: Not yet available.

Explanation: Under a new state law, National Grid now must also create a new way of financing “renewable energy distributed generation.” Formally known as the Renewable Energy Growth Program, it applies to smaller renewable energy sources, such as wind turbines or solar power, not larger centrally located renewable energy generators, such as hydropower facilities, according to a National Grid spokesman. The program would be financed by tariffs. It’s not yet clear what the specific cost will be to customers. The bill does not account for what those costs may be and information was not available from National Grid. The program is expected to take effect sometime this year.

Read the bill here.