BIPCo makes its case to socialize substation costs

Fri, 03/30/2018 - 9:00am
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“Holy cow!” said Block Island Power Company President Jeffery Wright of the four nor’easters that blew through the region in March at the Block Island Utility District’s meeting on Tuesday. 

Although the last storm was much less severe than predicted, all in all, Wright told the Utility Commissioners, 12 poles were broken during the storms, and the cost for damages was “south of $50,000.” He added that the response from customers was “overwhelming,” and that BIPCo had received notes written on bills, emails, and in-person thanking the company for keeping the public informed of outages and when they would be repaired. 

That public information came via posts to The Block Island Times, the Block Island Bulletin Board and on Facebook. “I look forward to the day we can update that [power outage map] automatically, instead of drawing it by hand,” said Wright. “Without a doubt, the tree-trimming helped.”

“Very good job,” said Utility Commissioner Mary Jane Balser. 

The next big project for BIPCo will be getting the utility poles ready to accept fiber optic lines for broadband services along the initial route that will serve Block Island’s “anchor institutions,” including the police and fire stations, Town Hall, the library, school, and medical center. 

While so far there haven’t been discussions at Utility District meetings concerning the roll out of broadband, Wright said: “By law we have to enable pole attachment.”

Interconnection costs

Wright provided a copy of his written testimony that he would be delivering later that evening (March 27) at the R.I. State House concerning proposed changes to the legislation that paved the way for the Block Island Wind Farm. First Warden Ken Lacoste, who is also on the BIPCo Board of Directors, along with Town Councilor André Boudreau and Solicitor Kathy Merolla also planned on attending. Testimony was delivered to two committees — one in the Senate and one in the House of Representatives.

At issue is who is to bear the $1.8 million interconnection cost between National Grid’s Block Island substation and Block Island Power Co. ratepayers. BIPCo is seeking to have this cost, along with that of a standby transformer ($500,000) socialized throughout Rhode Island, as opposed to being borne by Island ratepayers. 

BIPCo’s position is that the interconnection costs are “related facilities,” which per the legislation, are to be socialized. National Grid’s position is that the interconnection costs do not fall into the category of related costs, and should be the responsibility of the utility connecting to National Grid. 

“If this were a normal interconnection project, I agree with National Grid,” Wright wrote in his testimony. “This is not a normal project. This is a state-wide initiative that has put Rhode Island on the renewable energy map. An initiative that allowed Block Island to shut down its generators and nearly eliminate carbon emissions from burning one million gallons of oil.”

Wright’s testimony includes a breakdown of the impact of the interconnection costs, which National Grid had initially estimated would be $500,000. If Block Island ratepayers alone bear the costs, the impact to customers, on average, is $15.47 per month, for six years. If the cost is socialized, the cost to each R.I. customer is a mere six cents per month, for six years.

It was only a few days before BIPCo went before the R.I. Public Utilities Commission with a proposed new standard offer rate about a year ago that the company learned of the cost over-run that quadrupled the cost. “I am not exaggerating when I say my customers have been left with a sour taste in their mouths from this experience. The resulting rates leave them feeling disappointed,” wrote Wright for his testimony.

After the hearings Wright told The Times: “I feel pretty positive with the response we received form the Senate and House committees. I feel as though the National Grid representative didn’t have the details necessary to answer the questions the Committee members had about the cost, and he had no explanation for the timeliness of the cost overrun communications,” Wright said. “Their reasoning of the cost-overruns was that these things happen on utility projects. One thing that was clear was that the Committee members’ questions about the higher price of renewable energy projects was not solely aimed at the Block Island Wind Farm but renewable projects in general. I do feel that BIPCo and Ken Lacoste were successful in making the point that we want clarification on what the enabling legislation says regarding the interconnection costs.”

Financing RFP

Moving along, the Utility Commissioners reviewed the results of data that Commissioner Everett Shorey had put into a financial model provided by the National Rural Utilities Cooperative Finance Corporation that will be used to solicit bids on financing. Financing is needed to buy out the Town of New Shoreham’s stock holding in BIPCo, as well as that of the one-third minority owner. The current debt of BIPCo will also need to be refinanced, and the Commissioners hope to have some type of line of credit in place also. The Utility District hopes to secure $6.2 million in financing.

Shorey said he wanted to “thank the people at CFC. They spent a fair amount of time with me.”

Shorey explained his methods used in the financial forecasting model. The number of customers would increase each year based on historical trends, and expenses would be forecast to increase by two percent per year.

Commissioner Bill Penn said: “Last night the Historic District Commission approved five compressors for the Poor People’s Pub” to provide air conditioning. Penn was wondering if AC was factored into the model.

“Once one or two start moving” to add AC, said Balser, “others follow as it’s expected as an amenity.”

Shorey said he wasn’t working in increased demand from air conditioning. “I’m being conservative.”

“I agree with Everett,” said Wright on Shorey being conservative. “Some have wanted to add AC and backed out.” 

Shorey said he would “double check to see if all the data is in there. I think we’re close enough to submit this to CFC as a first draft.” The financial model will also be used to solicit a financing proposal from CoBank.

“Once the RFP is submitted they’ll both come out and walk you through” the process, said Wright.