PROVIDENCE – National Grid has dropped its R.I. Supreme Court appeal of a ruling by the R.I. Public Utilities Commission (PUC) that ordered the company to step up its efforts to find renewable energy sources for some of the state’s electricity.

National Grid backed down on Wednesday, after the commission clarified that it was not forcing the utility to sign long-term contracts for renewables, but rather ordering it to make a good-faith effort to seek out alternatives in addition to natural gas, coal and other standard fuel sources.

At issue is a disputed March 18 ruling by the PUC in which the commissioners unanimously rejected National Grid’s electricity supply plan for 2010 because it failed to include renewable energy sources as part of the proposed fuel mix.

In response to questions from Grid, the commissioners clarified on March 31 that the ruling “does not require [National Grid] to enter into any contracts [for renewable energy] at this time.”

But, they continued, the ruling does require Grid to seek out affordable renewable energy sources, adding: “It is this Commission and not [National Grid] which ultimately determines what is just and reasonable and in the best interest of ratepayers.”

A spokesman for National Grid declined to comment further on the ruling, but said the utility and the commission would continue to work on the issue.

State law calls for National Grid to aim to get 4.5 percent of Rhode Island’s electricity supply from renewable sources next year.

In an interview, Jerry Elmer, a staff attorney with the Rhode Island office of the Conservation Law Foundation, an advocacy group, said his organization “is very pleased” with Grid’s decision to drop the court appeal.

“We are glad that Grid, upon further reflection, has concluded that the PUC does, in fact, have not just the authority but the obligation to enforce the state’s renewable energy standard,” Elmer said.

In addition, Elmer reiterated his call for the General Assembly to pass a bill it is considering that would clarify state policy on long-term renewable energy contracts. He described it as “the best and most comprehensive long-term solution to this problem.”

The Senate Environment & Agriculture Committee on Wednesday held a second hearing about the bill (S 0111), but did not take a vote on the measure.

However, Elmer said he expects the committee to send the bill to the full chamber soon. “I’m not alarmed” by the delay, he said.

The bill is also supported by National Grid, partly because it includes financial incentives for the utility to comply with the alternative-energy mandate. However, those incentives were one of the reasons Gov. Donald L. Carcieri gave last year when he vetoed the bill after it was passed by the General Assembly.

In a related development, this week National Grid also filed a request asking the PUC for an expedited hearing on its energy supply purchasing plans. The utility said it wants to take advantage of the current low prices for commodities such as natural gas.

“The current wholesale market prices for electric energy have dropped significantly,” Thomas R. Teehan, an attorney for Grid, wrote in a filing. The utility’s residential and small business “customers would benefit by having electric energy costs locked-in at prices that are below the costs that these customers are currently experiencing,” he wrote.

The commission plans to hold a hearing on the utility’s request April 28 and vote on it April 30.

National Grid – a division of the U.K.-based National Grid plc (NYSE: NGG, LSE: NG) – distributes electricity to approximately 3.3 million customers in Massachusetts, New Hampshire, New York and Rhode Island and natural gas to about 3.4 million customers in those states. Additional information is available at www.nationalgridus.com.

For information about the R.I. Public Utilities Commission and its Division of Public Utilities and Carriers – including the text of recent filings by local utilities and other regulated businesses – visit www.ripuc.org.