EUTG: Wind farm will 'fundamentally change' electricity supply

Memo urges no resale of diesel generated power
Fri, 04/03/2015 - 11:15am

The Electric Utility Task Group (EUTG) has submitted a memorandum to the Town Council outlining a variety of issues associated with power generation and costs once the Block Island Wind Farm is operational and the transmission cable is connected to the mainland. 

The EUTG’s memorandum was discussed at the Town Council’s April 1 budget work session at Town Hall. The document, which was developed over the past six months by the EUTG, addresses myriad issues associated with installation of the National Grid-owned transmission cable and the transformation of BIPCo from a power generator and distributor to a distribution-only company.

"There are no answers in here," said EUTG Chair Barbara MacMullan, who crafted the document. "This is purely a list of questions. It gives the town an opportunity, the community an opportunity, to weigh in on rates and costs, and how they should be handled."

The memo says, “There will be very fundamental changes in how electricity is supplied to Block Island customers with concomitant changes in cost and how they should be allocated among customers.”

The EUTG has outlined a timeline punch-list and detailed the next steps in the town’s involvement in the process, including making changes to various energy related policies, including rate design, generation purchasing, oversight of standard offer rates, net-metering, conservation/demand side management programs, a distribution upgrade and BIPCo’s role on the island moving forward.

Issue number nine in the EUTG's memorandum is: "Prohibit Generation for Resale by BIPCo Using Diesel Generators." The group noted that, “BIPCo has commented publicly that they would consider running the generator to sell power back to the mainland grid once the cable is in place. During an interview with The Block Island Times for a Jan. 17 article, BIPCo co-owner Cliff McGinnes, Sr., said that BIPCo could remain an alternate energy source for ISO-NE (the regional Independent System Operator) during the peak summer season if extra energy was needed. The EUTG is recommending that, 'Regardless of whether this is feasible, the Town should take action to ensure that it cannot occur.'”

"Number nine specifically sets me back a little bit," said First Warden Ken Lacoste. "It gives me great consternation about generation for resale using diesel generators. The whole idea was to shut them down."

"Despite what Cliff (McGinnes) said at one meeting across the table a few weeks ago, the indication from the other members of BIPCo was that that was not even on their radar," said Town Manager Nancy Dodge, referring to shutting down the utility’s diesel generators. "So, we'll see..."

"You're not going to stop that," said Councilor Chris Warfel.

"Actually, we think we can," said Dodge.

"There are programs out there that utilities rely on for their kind of generation to be on standby,” said Warfel. “Diesel generators, natural gas generators, are all over New England in the power grid. They're on standby service. You're not going to stop that."

"So it's a non-starter?" asked Lacoste.

"More or less," replied Warfel.

The EUTG memo states that a “primary benefit” of the Block Island Wind Farm is the impact on air quality, reduced emissions, and the like. Some believe that BIPCo’s continued operation of its diesel generators to sell power to the mainland after the wind farm is operational would run counter to that edict.

In the memo, the EUTG expressed concerns about “generation purchasing” relating to how customers purchase energy. The group noted that, “It is our understanding that BIPCo intends to be the purchaser of all electricity that is sold on the island. However, in the deregulated electricity market on the mainland, individual consumers of electricity have the right to contract directly with generators of electricity to purchase power.”  

The group wrote that BIPCo would be expected to provide a “standard offer rate” to customers who don’t have the ability to purchase power directly from generators of electricity. Additionally, the way that BIPCo recoups its approximately $2 million annually in fixed costs “will need to be reevaluated” once the power company becomes a distribution-only utility and its “overall rates are redesigned.”

The EUTG’s memorandum also addressed a number of other BIPCo related issues, including the company’s “net-metering policy.” The memo says, “BIPCo’s net-metering policy is voluntary and differs in some important respects from the net-metering policy mandated by the Rhode Island Public Utilities Commission (PUC). When BIPCo’s rates are redesigned we will again have the opportunity to change the net-metering policy to adhere to state regulations.”

Another issue in the memo questioned BIPCo’s exemption from a host of laws and regulations because the utility has been isolated from the mainland.  With the connection of BIPCo, via the marine cable, to the mainland, “this will no longer be the case, and there should be a review of the benefits [and] costs associated with BIPCo’s compliance with [those] regulations.”

The EUTG stressed that there are “many rate and policy issues to be considered once the cable is installed and BIPCo becomes a distribution-only utility.” The group has recommended meeting with the Town Council to “discuss how we as a community move forward on these issues.”

An important issue that’s been debated at town meetings has been rates the customers pay the utility. The EUTG questioned whether there should be a “division of costs between summer and year round residents.” The EUTG also mentioned upgrading the island’s distribution system, regardless of whether the island is connected to the mainland via the cable.  

The group’s memorandum contains a timeline questionnaire related to the wind farm project and several pages noting the BIPCo/Pascoag exemptions.

The point of presenting the memo to the Town Council was "to put it on your radar, and to get some direction for the EUTG as to whether the Council wants us to study these things," said MacMullan.

"I look forward to more meetings with the EUTG," said Councilor Allan MacKay, who suggested that the two groups meet to talk about the memo.

MacMullan said, "Two weeks ago, the PUC (Public Utilities Commission) and division (public utility carriers) had a meeting with BIPCo — Nancy was there for the town and Everett Shorey was there for the [EUTG] — it was a good confluence of concern," she said. "So, I think they're (the PUC) ready to become engaged on this, because some of it will take some time."

When reached for comment about the memorandum, BIPCo president Al Casazza told The Block Island Times via email that, “BIPCo has just begun collecting the data necessary to take a position,” he wrote. “I expect that we will take some time understanding all the ramifications of being connected to the mainland.”

The Town Council and the EUTG will be meeting jointly on Wednesday, April 29 at 6 p.m. at Town Hall to discuss the memorandum. The EUTG's memorandum is available at by clicking on the Town Council’s April 1 meeting agenda.