The Rhode Island Attorney General’s Office on Monday withdrew its opposition to PPL’s acquisition of Narragansett Electric after reaching a settlement agreement with the Pennsylvania-based company.
The agreement allows PPL and National Grid (NYSE:NGG) to close the $3.8 billion deal, announced more than a year ago. Narragansett is the largest electricity transmission and distribution service provider in Rhode Island, as well as a natural gas distributor, serving about 780,000 customers. (See PPL to Sell UK Business, Acquire Narragansett Electric.) PPL said it expects to complete the acquisition by the end of the week.
“We’re pleased we’ve achieved this outcome, which further underscores PPL’s steadfast commitment to Rhode Island customers and to advancing the state’s ambitious decarbonization goals,” PPL CEO Vince Sorgi said.
As part of the agreement, PPL agreed to provide $50 million in bill credits to Narragansett customers and seek approval from the Rhode Island Public Utilities Commission to forgive more than $43 million in arrearages.
The company also agreed to forgo recovering transition costs associated with the deal and more than $20 million in current regulatory assets on Narragansett’s books. The AG’s office said the assets are related to information technology and cyber costs incurred by National Grid that will not be used by PPL following a transition period.
PPL also agreed not to seek any base rate increases for at least three years after the transaction closes and to wait until there has been at least 12 months of operating experience under the new leadership following the termination of the transition services agreements with National Grid.
It will also be required to submit a climate report within one year to the PUC and AG’s office, including providing information to the Rhode Island Executive Climate Change Coordinating Council as plans are developed to implement the Act on Climate, which requires a net-zero economy in the state by 2050.
Finally, PPL will make a $2.5 million contribution to the Rhode Island Commerce Corp.’s Renewable Energy Fund and make available an additional $2.5 million to the AG’s office to use in the evaluation of the climate report or the participation in any PUC proceedings to assess the future of the gas distribution business.
In a press conference held after the court decision, Neronha said the agreement equates to more than $200 million to the state from PPL.
“This is an incredibly important transaction for Rhode Island,” Neronha said. “Public utilities are certainly complex, and because of that complexity, sometimes all of us collectively in the public and government, our eyes tend to glaze over. But this was a really important matter.”
Sorgi said the acquisition of Narragansett helps to diversify PPL’s portfolio with more renewable generation.
“We have said throughout the approval process that PPL would bring clear value to Rhode Island, and the additional commitments announced today will provide direct and indirect benefits to customers that we believe will form the basis of a constructive and long-lasting presence in the state,” Sorgi said. “At the same time, the acquisition will provide PPL with a more diversified portfolio of assets, reduce the proportion of revenues derived from coal generation as part of our business mix and create additional opportunities to invest in a sustainable energy future.”