Advocacy Groups Say Heat Pump Households Pay Roughly $902 More Per Year

An analysis commissioned by five advocacy organizations says Rhode Island households with heat pumps are paying about $902 a year too much on their electricity bills. Regulators, meanwhile, have ordered a seasonal rate for all residential customers and a utility study, rather than a rate specifically for heat pumps.

That $902 figure is the estimated annual overpayment for the average Rhode Island home with a heat pump, according to an analysis released by five groups pushing regulators to establish a separate winter rate for heat pump users.

So far, state action has gone only partway in that direction. The Public Utilities Commission approved a seasonal pricing change that applies to all residential customers, while Rhode Island Energy and the Conservation Law Foundation reached an agreement requiring a study. A dedicated heat pump rate remains unresolved.

How the analysis was produced

The report was prepared by Switchbox, a nonprofit data organization, and commissioned by the Conservation Law Foundation, Environmental Defense Fund, Green Energy Consumers Alliance, Acadia Center and Sierra Club. CLF calls the report independent. The same groups that funded it have also been urging the PUC to adopt the rate structure it recommends.

In its release, CLF said the report concludes that current Rhode Island electric rates systematically overcharge many households that use heat pumps. The group highlighted two additional figures: under current rates, only 21% of households using natural gas for heat would save money by switching to a heat pump, while 87% would save under the proposed heat pump rate.

For the sponsors, that gap is central to the case that the current rate design helps keep gas-heated homes on gas.

Why winter consumption matters

The dispute concerns delivery charges, the portion of a bill that covers poles, wires and substations rather than the electricity itself. CLF argues that delivery costs depend on when power is used. Heat pumps consume most of their electricity in winter, and CLF says Rhode Island Energy's rate design does not reflect that pattern.

Switchbox's argument is that the grid is under the greatest strain in summer, when air conditioners are running across the state. Heat pump owners, by contrast, rely more heavily on their systems in winter, when the report says the grid has ample power available. From that perspective, charging them the same delivery rate all year makes them pay for strain they do not usually create.

The report recommends a dedicated heat pump rate that would better match the cost of serving those customers, which the sponsors say would lower bills for more households and make heat pumps easier to adopt.

Rhode Island Energy, in testimony to the PUC, challenged the formulas behind Switchbox's calculations and argued that many homes have electric-only appliances, complicating the design of such a rate.

Looking at Massachusetts

The advocates point to Massachusetts, where regulators required the state's three electric utilities to offer a winter heat pump rate last year. In April, Canary Media reported that those rates helped 140,000 Massachusetts households with heat pumps save $37 million on their electricity bills, or more than $250 per customer on average.

What regulators approved

The decisions at issue came in Rhode Island Energy's base distribution rate case, Docket 25-45-GE. Draft minutes show commissioners voted 3-0 to require the utility to create a seasonal charge for all residential electric customers. Winter is defined as December through March, and the spread between winter and non-winter rates is limited to 1.5 cents per kilowatt-hour.

That change applies to all residential customers. It is not a heat pump-specific rate.

At the same meeting, the commission also rejected Rhode Island Energy's request to raise its allowed return on equity to 10.75% and kept it at 9.275%, according to the draft minutes.

The heat pump issue followed a separate path. The PUC docket includes a “Heat Pump Rate Issue Settlement Agreement” between Rhode Island Energy and CLF dated May 26, with additional signatories added June 9. CLF says the commission accepted the agreement and required the utility to study the extent to which heat pump owners are being overcharged. Acadia Center says Rhode Island Energy agreed to examine the issue and propose possible bill credits for heat pump customers. After that, CLF says, the commission will consider whether to adopt a dedicated heat pump rate.

The sponsoring groups say they welcome temporary bill relief but are still seeking the permanent rate.

Credits will apply broadly

Heat pump households, like other residential customers, are set to receive general credits from the rate case that are unrelated to how they heat their homes. The draft minutes approve monthly hold-harmless credits from October 2026 through September 2027. Residential customers on A-16 and A-60 accounts are also slated to receive a $20.45 credit in January, February and March 2027.

Those credits are separate from any heat pump credit contemplated in the settlement. That credit would depend on what Rhode Island Energy's study finds and what it proposes next.

Where to find the documents

The sponsors' report page outlines the analysis. The PUC docket includes the settlement agreement, the utility's rebuttal testimony and the draft minutes from the Aug. 21 meeting, and the minutes link to video of the commission's deliberations at video.ibm.com/channel/WqQyXw296dg. The commission holds open meetings in Hearing Room A at 89 Jefferson Blvd. in Warwick.

The next step rests with the utility: it must submit its study to the commission, which will then decide whether heat pump owners should receive a rate of their own.