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S 2779Consumer Protection

Public Utilities and Carriers - Duties of Utilities and Carriers

Prevents large utility companies from charging customers for lobbying, political donations, advertising, and legal fees for rate hikes.

Held for study
Population
Affected
75
Email Legislator
Introduced Mar 4, 2026Committee Senate Commerce

Plain-English Summary

This legislation prohibits large public utilities (serving over 100,000 customers) from recovering specific costs through customer rates. These prohibited costs include advertising, lobbying, political contributions, charitable donations, trade association dues, and executive travel or entertainment. Furthermore, starting July 1, 2026, utilities cannot charge customers for legal and consulting fees incurred during rate increase proceedings. The bill also imposes a cap on annual budget increases for infrastructure, safety, and reliability plans, limiting them to a 3% increase over the previous five-year average.

For younger readers

This bill stops big electric and gas companies from making you pay for things that don't help keep the lights on. Right now, companies might add costs to your family's bill to pay for their advertisements, donations to politicians, or fancy trips for their bosses. This law says they have to pay for those things themselves. It also says they cannot make you pay for the lawyers they hire to ask for permission to raise your bill. Finally, it limits how much extra money they can spend each year on fixing their equipment to keep bills lower.

Who & Where It Applies

Impacted groups
Electric distribution companiesGas distribution companiesUtility ratepayersUtility shareholdersNon-profit organizations receiving utility donations
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Prevents ratepayers from involuntarily subsidizing corporate political speech, lobbying, and trade association dues that often oppose progressive environmental and social goals.
  • Protects low-income households by removing the burden of paying for executive excesses, such as luxury travel, entertainment, and private aircraft, thereby potentially lowering monthly utility bills.
  • Increases corporate accountability by stopping utilities from passing on the legal costs of fighting for rate hikes, forcing shareholders rather than the public to bear the financial risk of seeking higher profits.
  • The 3% cap on infrastructure budget increases might hinder the rapid grid modernization and expansion necessary to support a transition to green renewable energy sources.
  • Prohibiting the recovery of charitable giving expenses could lead utilities to drastically cut funding for local non-profits and community organizations that rely on these corporate donations.
  • Strict budget caps on safety and reliability spending could inadvertently lead to deferred maintenance, potentially risking the safety of workers and the community if the utility prioritizes profits over necessary repairs.
For Conservatives
  • Reduces crony capitalism by preventing government-sanctioned monopolies from forcing customers to pay for political contributions and lobbying efforts.
  • Imposes fiscal discipline on large corporations by capping budget increases and cutting wasteful spending on executive perks and unnecessary advertising.
  • Lowers the cost of living and doing business in the state by removing non-essential costs from utility rates, respecting the wallet of the taxpayer and business owner.
  • Represents significant government interference in private business operations by dictating exactly which legitimate business expenses can be recovered and capping budgets arbitrarily.
  • The 3% cap on infrastructure spending ignores market realities like inflation and supply chain costs, functioning as a form of central planning that could degrade service quality.
  • Infringes on the corporate rights of businesses to engage in political speech and association by effectively penalizing them financially for those activities compared to other industries.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 43 additions · 2 deletions

SECTION 1. Chapter 39-2 of the General Laws entitled "Duties of Utilities and Carriers" is hereby amended by adding thereto the following section: 39-2-1.5. Utility base rate -- Prohibitions on advertising, political, charitable, and investor-related expenses.

(a) In addition to costs prohibited in §§ 39-1-27.4(b) and 39-2-1.2, no public utility serving greater than one hundred thousand (100,000) customers distributing or providing heat, electricity, natural gas, or water to or for the public shall recover through rates any direct or indirect cost associated with:

(1) Advertising, marketing, communications, or public education that seek to influence public opinion, including any costs associated with activities such as research, analysis, preparation or planning undertaken in support of advertising, marketing, communications, or public education, or any other related costs identified by the commission, unless such marketing, advertising, communications or related costs are specifically approved or ordered by the commission;

(2) Membership dues, sponsorships or contributions to a business or industry trade association, group or related entity incorporated under Section 501 of the Internal Revenue Code of 1986, as amended;

(3) Charitable giving expenses, including contributions to organizations qualified under

section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended;

(4) Lobbying as defined in § 42-139.1-3;

(5) Contributions to political candidates, campaign committees, issue committees, or independent expenditure committees or similar political expenses; and (6)(i) Travel, lodging or food and beverage expenses for such company’s board of directors and officers or the board of directors and officers of such company’s parent company;

(ii) Entertainment or gifts;

(iii) Any owned, leased or chartered aircraft for such company’s board of directors and officers or the board of directors and officers of such company’s parent company; or

(iv) Investor relations.

(b) For any rate proceeding or infrastructure, safety and reliability proceeding, as described in § 39-1-27.7.1(d), initiated on or after July 1, 2026, an electric distribution company, gas company, pipeline company, or water company with more than one hundred thousand (100,000) customers shall not recover through rates its direct or indirect costs associated with its attendance in, participation in, preparation for, or appeal of such rate proceeding. Such costs shall include, but need not be limited to, attorneys’ fees, fees to engage expert witnesses or consultants, the portion of employee salaries associated with such attendance, participation, preparation or appeal of a contested proceeding and related costs identified by the commission.

(c) The commission may initiate rulemaking to implement the requirements of this chapter.

SECTION 2. Section 39-1-27.7.1 of the General Laws in Chapter 39-1 entitled "Public Utilities Commission" is hereby amended to read as follows: 39-1-27.7.1. Revenue decoupling.

(a) The general assembly finds and declares that electricity and gas revenues shall be fully decoupled from sales pursuant to the provisions of this chapter and further finds and declares that any decoupling proposal submitted by an electric distribution company as defined in § 39-1- 2(a)(12) or gas distribution company included as a public utility in § 39-1-2(a)(20) that has greater than one hundred thousand (100,000) customers, shall be for the following purposes:

(1) Increasing efficiency in the operations and management of the electric and gas distribution system;

(2) Achieving the goals established in the electric distribution company’s plan for system reliability and energy efficiency and conservation procurement as required pursuant to § 39-1- 27.7(d);

(3) Increasing investment in least-cost resources that will reduce long-term electricity demand;

(4) Reducing risks for both customers and the distribution company including, but not limited to, societal risks, weather risks, and economic risks;

(5) Increasing investment in end-use energy efficiency;

(6) Eliminating disincentives to support energy-efficiency programs;

(7) Facilitating and encouraging investment in utility infrastructure, safety, and reliability; and

(8) Considering the reduction of fixed, recurring customer charges and transition to increased unit charges that more accurately reflect the long-term costs of energy production and delivery.

(b) Each electric distribution company as defined by § 39-1-2(a)(12) and gas distribution company included as a public utility in § 39-1-2(a)(20) having greater than one hundred thousand (100,000) customers shall file proposals at the commission to implement the policy set forth in subsection (a) of this section. The commission shall approve these proposals, provided they contain the features and components set forth in subsection (c) of this section, and that they are consistent with the intent and objectives contained in subsection (a) of this section. Actions taken by the commission in the exercise of its ratemaking authority for electric and gas rate cases shall be within the norm of industry standards and recognize the need to maintain the financial health of the distribution company as a stand-alone entity in Rhode Island.

(c) The proposals shall contain the following features and components:

(1) A revenue decoupling reconciliation mechanism that reconciles annually the revenue requirement allowed in the company’s base distribution-rate case to revenues actually received for the applicable twelve-month (12) period. Any revenues over-recovered or under-recovered shall be credited to, or recovered from, customers, as applicable; and

(2) An annual infrastructure, safety, and reliability spending plan for each fiscal year and an annual rate-reconciliation mechanism that includes a reconcilable allowance for the anticipated capital investments and other spending pursuant to the annual pre-approved budget as developed in accordance with subsection (d) of this section.; and

(3) For any infrastructure, safety and reliability proceeding, as described in subsection (d) of this section, initiated on or after July 1, 2026, electric distribution companies and gas companies with more than one hundred thousand (100,000) customers shall not increase their annual budgets for infrastructure, safety, and reliability plans by more than three percent (3%) over the average of the approved "total capital spending" budgets for the previous five (5) years. Spending on specific capital investment projects approved by the commission outside of the infrastructure, safety and reliability plan may be excluded from the annual budget limit, subject to commission discretion.

(d) Prior to the beginning of each fiscal year, gas and electric distribution companies shall consult with the division of public utilities and carriers regarding their infrastructure, safety, and reliability spending plan for the following fiscal year, addressing the following categories:

(1) Capital spending on utility infrastructure;

(2) For electric distribution companies, operation and maintenance expenses on vegetation management;

(3) For electric distribution companies, operation and maintenance expenses on system inspection, including expenses from expected resulting repairs; and

(4) Any other costs relating to maintaining safety and reliability that are mutually agreed upon by the division and the company. The distribution company shall submit a plan to the division and the division shall cooperate in good faith to reach an agreement on a proposed plan for these categories of costs for the prospective fiscal year within sixty (60) days. To the extent that the company and the division mutually agree on a plan, such plan shall be filed with the commission for review and approval within ninety (90) days. If the company and the division cannot agree on a plan, the company shall file a proposed plan with the commission and the commission shall review and, if the investments and spending are found to be reasonably needed to maintain safe and reliable distribution service over the short and long term, approve the plan within ninety (90) days.

(e) The commission shall have the following duties and powers, in addition to its existing authorities established in this title:

(1) To maintain reasonable and adequate service-quality standards, after decoupling, that are in effect at the time of the proposal and were established pursuant to § 39-3-7.

(2) The commission may exclude the low-income rate class from the revenue decoupling reconciliation-rate mechanism for either electric or gas distribution. The commission also may exclude customers in the large commercial and industrial rate class from the gas-distribution mechanism.

(3) The commission may adopt performance incentives for the electric distribution company that provide a shared-savings mechanism whereby the company would receive a percentage of savings realized as a result of achieving the purposes of this section while the remaining savings are credited to customers.

(4) The commission shall review and approve, with any necessary amendments, performance-based, energy-savings targets developed and submitted by the Rhode Island energy efficiency and resources management council. The performance-based targets shall also be used as a consideration in any shared-savings mechanism established by the commission pursuant to subsection (e)(3) of this section.

(f) The Rhode Island energy efficiency and resources management council shall propose performance-based, energy-savings targets to the commission no later than September 1, 2010. The targets shall include, but not be limited to, specific energy kilowatt-hour savings overall and peak- demand savings for both summer and winter peak periods expressed in total megawatts as well as appropriate targets recommended in the opportunities report filed with the commission pursuant to § 39-1-27.7(d)(3). The council shall revise, as necessary, these targets on an annual basis prior to the reconciliation process established pursuant to subsection (c) of this section and submit its revisions to the commission for approval.

(g) Reporting. Every electric distribution company, as defined in subsection (a) of this section, shall report to the governor, general assembly, division of public utilities and carriers, and public utilities commission on or before September 1, 2012. The report shall include, but not be limited to, the following elements:

(1) A comparison of revenues from traditional rate regulation and how the revenues have differed as part of an approved decoupling structure;

(2) A summary of how the company is achieving the performance-based targets that may have been adopted pursuant to subsection (e)(4) of this section;

(3) A summary of any shared savings the company may have received pursuant to the performance incentives authorized in subsection (e)(3) of this section;

(4) A summary of how the company is achieving the service-quality standards required in subsection (e)(1) of this section;

(5) An overview of how decoupling is impacting revenue stabilization goals that have resulted from decoupling; and

(6) A summary of any customer education programs provided.

SECTION 3. This act shall take effect upon passage.