State utility regulators warn budget transfers will raise sewer rates, impact electrical customers

Providence Journal - 6/24/2017

June 24--PROVIDENCE -- Rhode Island's hospitals and courts received a boost in the state budget passed by House lawmakers Thursday night, but state utility regulators say electricity users and many Providence area sewer customers could take a hit.

The $9.2-billion budget, passed on a party line vote, used a number of transfers from outside accounts to plug a revenue shortfall. Among the more controversial were $12.5 million taken from an energy efficiency program funded by a surcharge on electricity bills and $5 million from sewer provider the Narragansett Bay Commission.

Both transfers came over the objections of state utilities regulators, who warned lawmakers they could lead to sewer rate hikes and a bad deal for electric customers.

A June 22 letter from the Public Utilities Commission to House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio said the utility "does not have excess funds available to make that transfer" and the $5 millionNarragansett Bay Commission transfer "will need to be restored through future rates."

The Narragansett Bay Commission provides sewer service for 41 percent of the state's residents, the letter said.

Regarding the $12.5 million transfer from the Energy Efficiency Program, which is funded through charges on National Grid utility bills, the PUC wrote that it would mean less value for ratepayers from the program, which had a $120 million budget this year.

Also on Thursday, a group of 10 manufacturers, trade associations and service providers -- including high electricity users -- wrote a letter opposing the transfer. The companies included Schneider Electric, The Dow Chemical Company and Ameresco.

Things turned out better for hospitals.

Language added to the budget Thursday would restore a payment that compensates hospitals for Medicaid's low reimbursement rates. Even partially offset with a licensing fee increase also added to the budget, the changes are expected to provide hospitals an additional $12.5 million next year, according to projections from House fiscal staff.

That change came after lawmakers had already restored some of the proposed $39 million in Medicaid cuts, some of which hit hospitals, Gov. Gina Raimondo had proposed in January.

How did it happen?

Amanda Barney, spokeswoman for the Hospital Association of Rhode Island, said restoring the hospital Medicaid payment while raising fees allowed the state to use more federal funds.

"Hospitals worked collaboratively with state leaders to ensure federal funds were maximized," Barney wrote in an email. "Both the hospitals and the State are beneficiaries of this collaborative approach."

The Hospital Association of Rhode Island is led by M. Teresa Paiva Weed, who stepped down as president of the state Senate earlier this year. She agreed not to lobby the General Assembly for a year.

Changes to the budget Thursday also added $950,000 to fill vacant positions, including magistrates, in the court system.

Lawmakers Thursday also returned $100,000 -- half of the funding Raimondo had requested --for the annual grants to promote local seafood and agriculture.

Despite state revenues coming in lower than expected this year, those and other one-time sources of revenue helped lawmakers draft a budget that lowered total spending only $5.2 million from Raimondo's proposal in January. (The state's share of that spending would decline $25 million from Raimondo's budget proposal.)

Other spending additions to the budget Thursday included $300,000 for the "Pay for Success" program to reduce recidivism among former prisoners and $460,000 in local aid for regional school transportation.

The budget moves on to the Senate for consideration starting with the Senate Finance Committee on Tuesday.

-- panderson@providencejournal.com

(401) 277-7384

On Twitter: @PatrickAnderso_

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