In 1996, Rhode Island passed legislation opening its electric industry to retail competition; implementation began in January 1998. Under the plan, electricity customers were given the option to select a competitive electricity supplier (i.e., an alternative to their normal utility) or accept standard offer services. The standard offer service is the price to customers who did not choose a competitive power supplier. The standard offer was set initially to equal the price paid by customers in year-ending September 30, 1996, subject to adjustments based on the consumer price index or factors reasonably out of control of the distribution utility and its power supplier.

• From 1990 through 1997, nominal retail electricity prices—prices unadjusted for the effects of inflation—increased, going from 9.15 cents per kilowatthour (kWh) in 1990 to a high of 10.70 cents per kWh in 1997. Because the restructuring plan set the standard offer rates at 1996 levels, prices dropped substantially in 1998 to 9.58 cents per kWh and to 9.02 cents per kWh in 1999 (see graph).
  
  
• Real electricity prices—prices from which the effects of inflation are eliminated—were stable from 1990 through 1997, indicating that Rhode Island's nominal retail prices did not increase more than inflation during those years. Real prices dropped precipitously in 1998 and 1999 because of the rate freeze noted above (see graph).
  
  
• In 1999, residential customers in Rhode Island paid an average of 10.13 cents per kWh, which was substantially above the national average of 8.16 cents per kWh for all residential customers. Industrial customers paid an average of 7.39 cents per kWh, which was also substantially higher than the national average of 4.43 cents per kWh for industrial customers.
  
  
• Because of fuel cost increases, Rhode Island regulators have approved rate increases for customers participating under the standard offer. In addition, many non-residential customers use the default service program instead of the standard offer. The default program charges market-based rates which have been climbing recently. Because of these factors the average retail price of electricity across the State should increase over the next few years or more.
  
  

Related Websites

• Energy Information Administration, Monthly Energy Review (Table 7.5):
  http://www.eia.doe.gov/mer/elect.html
• Average Retail Prices of Electricity, 1960 - 2003 (Table 8.10)
• Energy Information Administration, State Electricity Profiles: http://www.eia.doe.gov/cneaf/electricity/st_profiles/rhode_island.pdf
• Energy Information Administration, Electric Power Monthly (Tables 44-55): http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
• Energy Information Administration, U.S. Average Monthly Bills by Sector, Census Division, and State (Table 1): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales and Price for Power Marketers (Tables C1-C4): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales, and Price by State and Utility: http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html