Heat pumps are meant to save people money. It's time to let them work as intended. Photo: EcoPhotography.
The Problem
Families are feeling the rising costs of everything nowadays. Groceries are too expensive. Rent is too high. Utility costs are off the charts. Concerns about how to make ends meet are top of mind.
We at CLF are feeling those pressures too. That is why we’re working to cut how much it costs to power, heat, and cool our homes. Cleaner, cheaper energy, like solar and wind, paired with modern technologies, like heat pumps, can achieve those goals. But existing utility and energy systems protect an expensive, polluting status quo – which prevents customers from using technologies that can slash our bills and emissions.
These technologies work. Across the region, we’re seeing that heat pumps are critical for cutting how much energy it takes to keep homes comfortable – lowering bills and reducing the carbon pollution that overheats the planet.
The good news is that programs supporting the purchase and installation of heat pumps are improving and expanding. Rhode Islanders installed about 10,000 heat pumps since 2023, and they received benefits from the state’s energy efficiency program or from the Clean Heat Rhode Island financial rebate. But outdated utility rates are holding this powerful technology back. Right now, Rhode Island’s utility is overcharging heat pump owners for electricity when those customers should be saving money.
That’s why CLF and our partners stepped in to make things fair again.
Breaking Down the Issue
Like other utilities in New England, Rhode Island Energy charges customers based on their energy usage. This pricing structure also covers the costs of fixing and taking care of the wires, poles, and equipment that bring electricity to our homes. According to the utility, whoever uses more electricity should pay more to recoup these costs. So, heat pump owners see higher bills since they use more electricity overall (compared to those who heat their homes using oil and gas).
But the amount of stress a home’s electricity usage puts on transmission infrastructure depends on the time of year. In the summer, our electricity grid is near its limit keeping up with demand during hot days and heatwaves. So, if we use more electricity during those summer days, Rhode Island Energy must make costly upgrades to its infrastructure – which it passes onto customers. In the winter, the grid sees some relief as overall demand drops. Even if a home uses more electricity in winter, that usage doesn’t require the same costly upgrades.
Think of it like a highway: During peak rush hour, adding cars to the road might mean we need to add more lanes, fix roads more often, or even build a new highway. In the middle of the night, the highway is relatively open, so adding cars to the road doesn’t have much of an impact.
Heat pump owners use most of their power in the winter to keep their homes warm. But Rhode Island Energy doesn’t take the cost difference between winter and summer into account. Doing so is like asking someone who drives a lot, but mostly at midnight, to pay for the costs of building a new highway when they’re not the ones clogging the roads during rush hour. The result is artificially inflated winter bills for heat-pump-powered households.
Where Things Stand
CLF brought these issues to the Public Utilities Commission this past summer, during Rhode Island Energy’s most recent request for rate increases. The Commission voted on a few issues relating to the skyrocketing price of energy, ultimately setting a new winter rate. This new rate cuts how much the utility charges to deliver electricity service between December and March by an average of $12 a month per household. For heat pump owners, savings will probably double – to about $24 a month – because they’re using twice as much electricity to power their homes.
Up to $24 a month back, depending on how you heat your home, is a good step forward and certainly helps to put a few more groceries on the table. But the seasonal rate is just that – seasonal. Once March ends, these savings disappear until next winter. Not to mention, it doesn’t correct Rhode Island Energy’s outdated rate design that overcharges heat pump owners in the winter. These solutions are like patching a leak while ignoring the broken water pipe causing it.
Progress
CLF and our partners commissioned engineering experts Switchbox to examine how we can bring the utility’s rates into the 21st century. Switchbox’s research found that the average Rhode Island heat pump user is paying just over $900 more per year than they should because of the current rate system. It also demonstrates that heat pumps would do what they’re meant to – save people money compared to heating with dirty, expensive fuels – if electricity rates are designed correctly.
The research firm provides the Commission with a long-term, sustainable, and fair solution: A new, specially designed heat pump rate. With this rate, heat pump owners would be charged exactly what they owe. And for someone looking to upgrade their heating system, it’s almost guaranteed to cut bills as originally intended. For example, nearly 90% of gas heating customers could cut their bills by upgrading to heat pumps.
The solution exists. Now the Commission needs to adopt it.
Next Steps
Before the Commission decides on a fairer rate, Rhode Island Energy will do its own research on how its current pricing structure impacts heat pump customers. The Commission will then consider whether to create the dedicated heat pump rate Switchbox recommends. CLF will be watchdogging Rhode Island Energy’s conclusions to prevent the utility from greenwashing or sticking to the status quo. At the same time, Rhode Island Energy and CLF have agreed to work together to return heat pump owners’ overpayments to them, potentially via bill credits this winter.
Heat pump owners are getting overcharged all across the region, but there’s a solution that’s fair and gets the technology working the way it should. CLF’s advocacy in Rhode Island is based on Massachusetts’ winter heat pump rates, and we’re trying to establish heat pump rates for customers in other states. In Connecticut, for example, CLF will bring this argument into Eversource’s current rate increase request. We’re exploring getting involved in Central Maine Power’s request for a rate increase, too.
The way Rhode Island Energy has set its current rates needs to match the reality of our heating technologies. Otherwise, it systematically overcharges households when it shouldn’t. That’s why the premise of a heat pump-specific rate is simple: You pay what you owe. Nothing more, nothing less. No more inflated prices that end up blocking a money-saving technology from working. It’s just fairness – and fairness is common-sense policy.
