Rhode Island Heat Pump Owners Overpay $902 a Year, Report Says

Rhode Island homes that heat with a heat pump are being billed roughly $902 too much each year, according to a study five advocacy groups published Sept. 1. The groups are asking state regulators for a separate winter electric rate for these homes.

No such rate has been approved. On Aug. 21 the state’s utility regulators chose a seasonal price change that covers all residential accounts, and the question of a heat pump rate was sent to a study by the utility.

What it means for heat pump households right now

Homes with heat pumps keep paying the same delivery charges as every other household for now. The groups behind the study say this pricing discourages switching away from gas. By their count, just 21% of homes now heated by gas would come out ahead by installing a heat pump at current prices, while 87% would come out ahead under the rate they propose.

Any lasting change waits on Rhode Island Energy, the state’s electric company. It must study the issue first. Only then will regulators weigh a dedicated rate.

Who paid for the study

Switchbox, a nonprofit that analyzes energy data, did the work. It was paid for by the Conservation Law Foundation (CLF), Environmental Defense Fund, Green Energy Consumers Alliance, Acadia Center and Sierra Club. CLF describes the findings as independent. Those same five sponsors are lobbying regulators for the exact rate the study endorses.

Why the fight is over winter use

The dispute concerns delivery charges: the money on a bill that covers the grid itself, from utility poles to substations. The cost of the power is a separate line and is not part of this argument.

Switchbox says demand on Rhode Island’s grid peaks in summer, when cooling runs across the state. Heat pumps do most of their work in winter, a season when, in the group’s view, the grid has room to spare. A flat delivery rate all year therefore charges heat pump homes for peak strain that comes mostly from someone else, the study argues.

The utility rejects that math. In testimony filed with regulators, Rhode Island Energy challenged the formulas Switchbox used and noted that plenty of homes run only on electric appliances, which complicates building a rate around one device.

The Massachusetts comparison

Supporters cite the state next door. Massachusetts ordered its three electric companies to start offering a winter heat pump rate last year. According to Canary Media, 140,000 households there saved $37 million in total, which works out to more than $250 per customer on average.

What regulators decided in August

The Aug. 21 votes were part of the utility’s base rate case, Docket 25-45-GE. Draft minutes show a unanimous 3-0 vote ordering a seasonal charge for every home on residential electric service. Under that order:

• The winter period covers December through March.
• Winter and off-season charges may differ by no more than 1.5 cents per kilowatt-hour.
• The utility asked to lift its allowed profit, measured as return on equity, to 10.75%. Regulators said no and left it at 9.275%.

Heat pumps were handled in a separate deal. Rhode Island Energy and CLF signed a settlement on May 26, and other parties joined on June 9. CLF says regulators approved it. Acadia Center says the utility committed to examine the overcharge claim and suggest possible bill credits for heat pump homes. The sponsors say short-term credits are welcome, but their goal remains a permanent rate.

Bill credits coming to all households

Every residential customer, heat pump or not, will get general credits from the rate case. The draft minutes approve monthly credits from October 2026 through September 2027 meant to soften the rate change. Homes on the A-16 and A-60 rate plans will also get $20.45 off in each of January, February and March 2027.

The heat pump credit discussed in the settlement is separate and has not been set. Its size depends on the utility’s study and the proposal it brings back to regulators.

Source: Uprise RI