Fight to share substation costs not over

Fri, 02/02/2018 - 9:45am
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The Block Island Power Company is still hoping to socialize the $1.8 million cost of the substation with National Grid’s mainland ratepayers.

“We are still very much in the fight for the substation costs,” said BIPCo President Jeffery Wright, noting that the Town Council recently voted to seek revisions to  the enabling legislation that allowed the creation of the Wind Farm to include language supporting such a move.

The proposed language states: “All interconnection and standby transformer costs which have been and may be incurred by National Grid and/or by the electric distribution company and/or by the Block Island Power Company or its successor shall also be charged in transmission rates in a manner that socializes the costs throughout Rhode Island. National Grid and/or the electric distribution company shall reimburse the Block Island Power Company or its successor for any and all funds expended by the Block Island Power Company or its successor in connection with all interconnection and standby transformer costs and National Grid shall socialize all costs of this reimbursement throughout Rhode Island as set forth herein. The amendment to this section clarifies the legislative intent of this section as enacted on June 15, 2010; therefore, this amendment shall be retroactively applied and shall be effective as of June 15, 2010.”

The move comes on the heels of some complaints on the mainland, specifically in the form of a resolution passed by the Newport City Council, stating that the shared costs of the Wind Farm have, in part, raised rates on the mainland. Recently received power bills on the mainland “are giving [ratepayers] anxiety and sticker shock due to huge increases...” the resolution stated.

The proposed Block Island language does not ask for the cost of the substation to be shared equally, but rather makes the point of the cost having a higher impact on Block Island ratepayers.

“Should the electric distribution company own, operate, and maintain the cable, the annual costs incurred by the electric distribution company directly or through transmission charges shall be recovered annually through a fully reconciling rate adjustment from customers of the electric distribution company and/or from the Block Island Power Company or its successor, subject to any federal approvals that may be required by law,” the proposed language states. “The allocation of the costs related to the transmission cable through transmission rates or otherwise shall be structured so that the estimated impact on the typical residential customer bill for such transmission costs for customers in the Town of New Shoreham shall be higher than the estimated impact on the typical residential customer bill for customers on the mainland of the electric distribution company.”

The proposed language then proposes a formula by which the costs would be shared: “This higher charge for the customers in the Town of New Shoreham shall be developed by allocating the actual cable costs based on the annual peak demands of the Block Island Power Company and the electric distribution company, and these resultant costs recovered in the per kWh charges of each company. In any event, the difference in the individual charge per kWh or per customer/month shall not exceed the ratio of average demand to peak demand for Block Island Power Company relative to the electric distribution company, currently at 1.8 to 1.0 respectively. To the extent that any state tariffs or rates must be put into effect in order to implement the intention of this section, the Public Utilities Commission shall accept filings of the same and shall approve them.”

The legislation still needs to find a sponsor in the General Assembly.

Wright noted, however, that the town is still planning to take the case to the Rhode Island Supreme Court as soon as the PUC files its final decision on the matter. He said the “revised legislation is really a town initiative and the appeal to the Supreme Court is a BIPCo initiative. We're not giving up yet. It’s about a five cent/kwh savings for our customers, who I advocate for.”

Wright also provided some details as to the function of the new substation.

“The new substation that was built by National Grid is much bigger than ours in order to handle the wind production. For example, our station is rated 2,400 volts and 10 megawatts. The Grid station is rated 34,500 volts and 30 megawatts. The higher voltage in Grid's station is needed because of the distance to the mainland and capacity necessary to deliver the wind energy.” Wright said the entire cost of the substation was “probably more in the $8 million to $10 million range,” but he added he was not sure if those numbers were entirely accurate. “They also have some very sophisticated equipment in there necessary to deal with the wind” energy production, Wright said. The $1.8 million pricetag was the specific cost of the substation’s interconnection to BIPCo. 

“The footprint that contains the equipment that serves BIPCo is relatively small compared to the entire station,” said Wright. “Maybe 20 percent, tops.”