BIPCo sells land to accommodate substations

Sun, 10/18/2015 - 7:45pm

The Block Island Power Company (BIPCo) has sold land on its Ocean Avenue property in transactions totaling $475,000 to The Narragansett Electric Company and Deepwater Wind Block Island for the purpose of building two substations.

Having a substation on Block Island was deemed necessary from the time the offshore wind farm project was announced back in 2007. 

According to National Grid spokesperson, David Graves, “Narragansett Electric is National Grid. Narragansett is the legacy company. Legally, we are Narragansett Electric d/b/a National Grid.” The area that was purchased is in plat 17, lot 37.

BIPCo co-owner Al Casazza explained the transaction to The Block Island Times, stating that “one condominium unit will be split into three parcels. National Grid will build a substation on one parcel, while Deepwater Wind will build a substation on the other two parcels. The two substations will be situated beside each other.”

Casazza said that the rest of BIPCo’s property will remain as it exists at its Ocean Avenue location. He also said the electrons will flow from the Block Island Wind Farm “first to the Deepwater Wind substation, then to the National Grid substation where it will then be routed to the mainland and then back to BIPCo.”

Electric Utilities Task Group (EUTG) Chair Barbara MacMullan, who has been involved with analyzing the transmission cables’ impact on the island, said “I know they had to transfer property to Deepwater, or to National Grid, for the substation. So, that’s what that’s for.” 

Town Manager Nancy Dodge informed The Times that the building of the substations on BIPCo’s property has gone through the necessary planning and zoning processes.

Under the property purchase agreement, The Narragansett Electric Company will own “Land Unit 1” of the development, while Deepwater Wind Block Island will be the owners of “Land Units 2 and 3.” The condominiums will be governed by the “BIPCo Land Condominium Association” under auspices of an Executive Board consisting of a President, Vice-President and Secretary who are to be nominated by the owners of the land. 

The agreement states that BIPCo “reserves the unconditional right, at its costs, to subdivide other units on the property.” It also states that the “first phase” of the substation being built on the BIPCo property will contain three units, and that the “maximum number of units” that may be created cannot exceed 99.

DiPrete Engineering, a Cranston-based engineering and surveying company, will survey the area of the proposed substations.

The transaction, which was signed on July 20, 2015, breaks down into six separate sales:

The Narragansett Electric Company paid $280,000 and $18,375 separately for the warranty deed for Plat 17, Lot 37 and made one payment of $34,125 for a permanent easement on what the agreement termed the “BIPCo site.” Deepwater Wind Block Island paid $120,000 for a warranty deed on Plat 17, Lot 37 and $22,000 and $500 separately for a permanent easement on the BIPCo property. 

National Grid Consulting Engineer David Campilii said, “An electrical substation is a collection of switches, circuit breakers, controls, transformers, and other electrical equipment, almost always in a fenced yard for safety and security. A substation will serve several purposes. One function of an electrical substation is to change voltage levels, often from higher transmission voltages to lower distribution voltages that can be used to serve homes and businesses. Substations will also typically have equipment to keep voltages within acceptable limits. Circuit breakers and switches allow for connecting or disconnecting parts of the power grid, either for maintenance of equipment, or to safely de-energize a part of the power grid in the event of a short circuit, like if a tree falls on a wire or a pole gets hit.

“There is already a substation on Block Island, BIPCo’s, so this isn’t a new thing for the island,” added Campilii. “There will be a new National Grid substation constructed next to the BIPCo substation. This substation will interconnect the Deepwater Wind Farm to the National Grid cable to the mainland. There will also be a transformer added to the National Grid substation to connect BIPCo to the electrical grid.”

The sale prompted a discussion as to how the $475,000 that BIPCo received could be utilized. Some are suggesting that it could offset the cost of connecting the island to the transmission cable, which was estimated as high as $500,000.

“The sale of the land and the proceeds related thereto will be a subject of the next rate case,” said Cynthia Wilson-Frias, the PUC’s deputy chief of legal services. “The proceeds will be used for the benefit of ratepayers, but without reviewing all of the information, I can’t speak to specifics.”

Casazza said that BIPCo would explore how the $475,000 in revenue could be applied, but disclosed that the utility company’s assets are encumbered by a $3 million United States Department of Agriculture (USDA) Rural Utilities Service loan.

Per the USDA’s website, the Rural Utilities Service “administers programs that provide much-needed infrastructure or infrastructure improvements to rural communities. These include water and waste treatment, electric power and telecommunications services.”

“I’m going to check with our lawyer and accountant to see how we can use the ($475,000) money,” he said. “All of our assets, like the engines, are collateral to the $3 million loan we have with the Rural Utilities Service. We have to clear it with them.”

Casazza later replied in an email that, “The proceeds from the sale have to be applied to the purchase of a fixed asset. Since the substation upgrade would be a fixed asset, we think the funds could be used to support that.”

Casazza noted that Block Island’s ratepayers are responsible for paying back the Rural Utilities Service loan.

First Warden Ken Lacoste said that, “The use of the ($475,000) in revenue has been discussed before and will be part of the ongoing discussion of the rate case.”  

“That’s something that should be discussed,” said Councilor Mark Emmanuelle. “That could offset the $500,000 cable cost.”

“The reality is that the Town Council is largely unaware of what is going on between the PUC (Rhode Island Public Utilities Commission) and BIPCo. That isn’t to say that others in the town government are not aware. It is of great concern,” said Councilor Chris Warfel. “We need to know what exactly is going on. We all should be aware of this and make sure the ratepayers are protected.”

“I hope that BIPCo will be forthcoming, and I anticipate that they will,” said Second Warden Norris Pike. “They’re taking the maximum amount of profit, but they can’t do that because they’re too small a company. I hope the power company becomes a co-op, or that it’s ratepayer owned. Hopefully we’ll end up there in the end.”

Emmanuelle said that the subject of offsetting the cable connection cost and not passing it along to the island’s ratepayers should be placed on the Town Council’s agenda. 

“I’d like to see this on the agenda,” said Emmanuelle. “We want to have a roundtable with BIPCo. We want it to be amicable. We don’t want the lawyers taking over. I look at this as an opportunity of a public/private partnership where it benefits both sides.”