AN ACT RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION (Provides that effective July 1, 2026, the profit margin of any electric distribution company or distributor of natural gas, would not exceed four percent (4%), in any given calendar year.)

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LC005165
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION

Introduced By:
Representatives Cotter, Kazarian, Potter, Tanzi, McGaw, Morales,
Stewart, Handy, Casimiro, and Cruz

Date Introduced:
February 27, 2026

Referred To:
House Corporations
It is enacted by the General Assembly as follows:
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SECTION 1. Section 39-1-27.7.1 of the General Laws in Chapter 39-1 entitled "Public
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Utilities Commission" is hereby amended to read as follows:
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39-1-27.7.1. Revenue decoupling.
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(a) The general assembly finds and declares that electricity and gas revenues shall be fully
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decoupled from sales pursuant to the provisions of this chapter and further finds and declares that
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any decoupling proposal submitted by an electric distribution company as defined in § 39-1-
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2(a)(12) or gas distribution company included as a public utility in § 39-1-2(a)(20) that has greater
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than one hundred thousand (100,000) customers, shall be for the following purposes:
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(1) Increasing efficiency in the operations and management of the electric and gas
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distribution system;
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(2) Achieving the goals established in the electric distribution company’s plan for system
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reliability and energy efficiency and conservation procurement as required pursuant to § 39-1-
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27.7(d);
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(3) Increasing investment in least-cost resources that will reduce long-term electricity
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demand;
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(4) Reducing risks for both customers and the distribution company including, but not
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limited to, societal risks, weather risks, and economic risks;
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(5) Increasing investment in end-use energy efficiency;
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(6) Eliminating disincentives to support energy-efficiency programs;

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(7) Facilitating and encouraging investment in utility infrastructure, safety, and reliability;
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and
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(8) Considering the reduction of fixed, recurring customer charges and transition to
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increased unit charges that more accurately reflect the long-term costs of energy production and
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delivery.
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(b)
(1)
Each electric distribution company as defined by § 39-1-2(a)(12) and gas distribution
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company included as a public utility in § 39-1-2(a)(20) having greater than one hundred thousand
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(100,000) customers shall file proposals at the commission to implement the policy set forth in
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subsection (a) of this section. The commission shall approve these proposals, provided they contain
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the features and components set forth in subsection (c) of this section, and that they are consistent
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with the intent and objectives contained in subsection (a) of this section. Actions taken by the
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commission in the exercise of its ratemaking authority for electric and gas rate cases shall be within
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the norm of industry standards and recognize the need to maintain the financial health of the
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distribution company as a stand-alone entity in Rhode Island.
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(2) Provided, effective July 1, 2026, the profit margin of any public utility company that is
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an electric distribution company or gas distribution company as further defined in § 39-1-2, shall
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not have a profit margin greater than or exceeding four percent (4%), in any given calendar year.
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The public utilities commission shall amend its rules and regulations as needed, consistent with the
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provisions of this chapter. As used herein, a “profit margin” means and shall refer to the return on
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equity, which shall be the return on the equity portion of the base rate, that is allowed by the
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commission.
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(c) The proposals shall contain the following features and components:
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(1) A revenue decoupling reconciliation mechanism that reconciles annually the revenue
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requirement allowed in the company’s base distribution-rate case to revenues actually received for
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the applicable twelve-month (12) period. Any revenues over-recovered or under-recovered shall be
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credited to, or recovered from, customers, as applicable; and
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(2) An annual infrastructure, safety, and reliability spending plan for each fiscal year and
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an annual rate-reconciliation mechanism that includes a reconcilable allowance for the anticipated
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capital investments and other spending pursuant to the annual pre-approved budget as developed
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in accordance with subsection (d) of this section.
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(d) Prior to the beginning of each fiscal year, gas and electric distribution companies shall
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consult with the division of public utilities and carriers regarding their infrastructure, safety, and
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reliability spending plan for the following fiscal year, addressing the following categories:
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(1) Capital spending on utility infrastructure;

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(2) For electric distribution companies, operation and maintenance expenses on vegetation
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management;
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(3) For electric distribution companies, operation and maintenance expenses on system
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inspection, including expenses from expected resulting repairs; and
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(4) Any other costs relating to maintaining safety and reliability that are mutually agreed
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upon by the division and the company.
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The distribution company shall submit a plan to the division and the division shall
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cooperate in good faith to reach an agreement on a proposed plan for these categories of costs for
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the prospective fiscal year within sixty (60) days. To the extent that the company and the division
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mutually agree on a plan, such plan shall be filed with the commission for review and approval
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within ninety (90) days. If the company and the division cannot agree on a plan, the company shall
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file a proposed plan with the commission and the commission shall review and, if the investments
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and spending are found to be reasonably needed to maintain safe and reliable distribution service
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over the short and long term, approve the plan within ninety (90) days.
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(e) The commission shall have the following duties and powers, in addition to its existing
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authorities established in this title:
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(1) To maintain reasonable and adequate service-quality standards, after decoupling, that
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are in effect at the time of the proposal and were established pursuant to § 39-3-7.
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(2) The commission may exclude the low-income rate class from the revenue decoupling
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reconciliation-rate mechanism for either electric or gas distribution. The commission also may
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exclude customers in the large commercial and industrial rate class from the gas-distribution
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mechanism.
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(3) The commission may adopt performance incentives for the electric distribution
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company that provide a shared-savings mechanism whereby the company would receive a
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percentage of savings realized as a result of achieving the purposes of this section while the
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remaining savings are credited to customers.
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(4) The commission shall review and approve, with any necessary amendments,
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performance-based, energy-savings targets developed and submitted by the Rhode Island energy
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efficiency and resources management council. The performance-based targets shall also be used as
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a consideration in any shared-savings mechanism established by the commission pursuant to
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subsection (e)(3) of this section.
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(f) The Rhode Island energy efficiency and resources management council shall propose
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performance-based, energy-savings targets to the commission no later than September 1, 2010. The
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targets shall include, but not be limited to, specific energy kilowatt-hour savings overall and peak-

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demand savings for both summer and winter peak periods expressed in total megawatts as well as
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appropriate targets recommended in the opportunities report filed with the commission pursuant to
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§ 39-1-27.7(d)(3). The council shall revise, as necessary, these targets on an annual basis prior to
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the reconciliation process established pursuant to subsection (c) of this section and submit its
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revisions to the commission for approval.
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(g)
Reporting.
Every electric distribution company, as defined in subsection (a) of this
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section, shall report to the governor, general assembly, division of public utilities and carriers, and
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public utilities commission on or before September 1, 2012. The report shall include, but not be
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limited to, the following elements:
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(1) A comparison of revenues from traditional rate regulation and how the revenues have
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differed as part of an approved decoupling structure;
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(2) A summary of how the company is achieving the performance-based targets that may
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have been adopted pursuant to subsection (e)(4) of this section;
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(3) A summary of any shared savings the company may have received pursuant to the
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performance incentives authorized in subsection (e)(3) of this section;
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(4) A summary of how the company is achieving the service-quality standards required in
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subsection (e)(1) of this section;
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(5) An overview of how decoupling is impacting revenue stabilization goals that have
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resulted from decoupling; and
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(6) A summary of any customer education programs provided.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION
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This act would provide that effective July 1, 2026, the profit margin of any electric
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distribution company or distributor of natural gas, would not exceed four percent (4%), in any given
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calendar year. This act would further define a “profit margin” as the return on equity, which would
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be the return on the equity portion of the base rate, that is allowed by the commission.
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This act would take effect upon passage.
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