Header, the Administration of the Honorable Lincoln C. Almond
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August 7, 1996


I am transmitting to the Secretary of State, with my signature, 96-H-8124, Substitute B, "An Act Relating to The Utility Restructuring Act of 1996."

The Utility Restructuring Act of 1996 with its companion bill, 96-H-8123, Creating the Retail Electrical Licensing Commission, represents an unprecedented and innovative approach to initiating competition in the electrical energy industry. Today Rhode Island becomes the first state in the nation to adopt legislation which opens to competition the last great remaining monopoly, the electrical utility industry.

Last year I vetoed a bill that would have opened the electrical power market in Rhode Island to a form of retail choice that was so poorly crafted that I believed it would have caused significant harm to the citizens of our state as well as to our utilities. In the course of vetoing that legislation, I secured a pledge from the utilities that they would work diligently in the next year to facilitate restructuring. As a result, the utilities of our state began to meet with legislative leaders and crafted the legislation which is before me today.

I strongly support this restructuring and the concept that greater competition will reduce electricity rates. Since the size of Rhode Island's electrical load is only six percent of New England's total, I believe that the legislation's transition to full competition is logical since a larger market will be needed before true competition can begin. At the outset, a transition or access charge intended to compensate existing utilities for above-market or stranded costs will be levied. Once competition at a certain level is reached (defined in the legislation as at least 40 percent of the kilowatt hour sales at retail choice in New England), a market valuation will then be used to test and adjust the value of the transition charges. The effectiveness and timeliness of this valuation will be, I believe, essential to addressing the concern expressed by some that the initial access charges may be overly generous to the utilities.

The pace of change in the electrical energy industry will require that Rhode Island possess the ability to adjust to developments in neighboring states. I believe that this legislation allows for such response- It is impossible to predict today what the future of retail consumer choice for electrical power will hold. This legislation, however, begins the transition to full competition, which when achieved, offers the potential for significant consumer benefits to the people of Rhode Island.


Lincoln Almond