BOSTON

RHODE ISLANDERS pay some of the highest utility bills in the country, so it’s no wonder that National Grid’s recent filings for hefty electric- and natural-gas rate hikes sent shock waves throughout the state.

But a new law offers potential relief.

Passed in 2006, the groundbreaking Rhode Island law, created with input from Governor Carcieri’s office, transforms how National Grid supplies its customers with energy, and it is soon to bear fruit. Starting next year its bold new mandate kicks in, requiring National Grid to help its customers save energy before turning to higher-cost power-plant supplies. This means energy-efficiency measures, such as rebate programs for buying energy-efficient appliances for homeowners and lighting upgrades for businesses, must get priority over more expensive traditional energy sources.

With efficiency “resources” costing just 3 cents per kilowatt-hour and power-plant supply costing 12.5 cents, it is a long overdue and common-sense approach.

Today Rhode Island spends more than a billion dollars on the higher-cost power-plant supply, but only $16 million to achieve more energy efficiency, even though there are ample opportunities for saving energy. A newly released “Efficiency Opportunity Report” concludes that there is an enormous amount of energy-efficiency potential that is cheaper than supply waiting to be harnessed by National Grid.

Commissioned by an independent body called the Rhode Island Energy and Resources Management Council, or ERMC, the new report is a blueprint for utility action. It takes Rhode Island one step closer to realizing the bold, new efficiency-first paradigm envisioned by the legislature. National Grid must now use the report to develop its plans for complying with the law by Sept. 1.

According to the report, the total amount of energy demand that can be avoided through energy-efficiency in the residential, commercial and industrial sectors is estimated at 458 megawatts, roughly equivalent to the capacity of the natural-gas-fired Manchester Street Station, in Providence.

The greatest opportunities lie in the residential and commercial sectors, where energy use can be cut 28 percent over the next 10 years, but industrial facilities can also benefit from energy efficiency, with savings estimated at 14 percent. Total dollar savings through 2018 are pegged at a whopping $1.2 billion.

What’s more, the efficiency-first mandate will generate a variety of new jobs for Rhode Island, ranging from skilled workers needed to change out inefficient lighting and insulate attics to efficiency consultants needed to identify strategic opportunities for energy savings.

Beginning early next year, Rhode Islanders will see the effects of the new law. Consumers can expect greater availability and access to such programs as Energy Wise and the Energy Star appliance and central-air-conditioning programs. New programs may also become available, such as incentives to buy more efficient water heaters and computer equipment. Taking advantage of these energy-efficiency offerings to cut home and business energy use is the best way for Rhode Islanders to cope with the impending rate hikes caused by the rising costs of fossil fuels.

This new system offers great news for Rhode Island consumers and businesses. The bad news is that there remains a large barrier to capture these savings — the need to re-align how the utility gets paid. Even though National Grid is a “wires-only” company that does not own any power plants, and only makes money on delivery charges, under current regulation the more energy it sells, the more money it makes. This arrangement effectively penalizes National Grid and its shareholders: When you use less electricity, they make less money.

To resolve this dilemma in Massachusetts, its utility commission recently announced a simple solution with a fancy name — decoupling. Going forward, delivery charges in that state will be calculated based on how much it costs to run the company and maintain power-distribution systems. If the utility collects more revenue than expected, customers will get a credit on their bills; if they collect less, customers would see a small surcharge.

Rhode Island needs decoupling too if it wants to fulfill the “all efficiency cheaper than supply” mandate and the promise of more than a billion dollars of savings.

We urge National Grid to go the full mile as it develops its plans for meeting the efficiency-first mandate. And we urge the state’s regulators to implement decoupling by breaking the link between kilowatt-hour sales and the utility’s revenue.

It’s Rhode Island’s time to shine as it leads the rest of the country into the brave new era of clean energy.

Sam Krasnow is a member of the new Rhode Island Energy Efficiency and Resources Management Council and a policy advocate at Environment Northeast. Daniel L. Sosland is executive director at Environment Northeast.