BIPCo works out a contingency plan
While many businesses on Block Island are in a wait-and-see mode, the Block Island Power Company has been busy coming up with a contingency plan to weather the storm of the coronavirus pandemic.
During the Block Island Utility District’s Board of Commissioners meeting on Saturday, May 16 (held remotely by Zoom) BIPCo President Jeffery Wright laid out various options for the commissioners to take.
Wright has been monitoring the island’s electrical usage on a daily basis, and while he reported that March and April were down only slightly from last year, which he attributed mainly to a warm winter, May, to date, has seen a drop of 16.5 percent.
Whether things will pick up is the greatest unknown. Commissioner Everett Shorey said that on the residential side, “people are not cancelling their reservations — yet.”
Chair Barbara MacMullan noted that restrictions on travel from out of state were still in place, requiring visitors to self-quarantine for 14 days. “Unless the governor lifts the restrictions,” she said, “by no means is this market sure to hold up.”
Then there are the marinas, which are among the biggest users of electricity in the summer. Currently boaters from out of state are under the same quarantine rules as other visitors, and only seasonal slip owners are allowed to dock at marinas.
The sewer plant is also one of BIPCo’s largest customers, and with late and limited openings of hotels and restaurants, its electric usage is sure to be down significantly as well.
“There’s no upside to this year,” said Shorey.
Commissioner Mary Jane Balser, who co-owns the Block Island Grocery, said: “There’s a lot more layers to this whole situation.” One of those is the work force, most of which comes from Europe and Central America. J-1 visa holders have been asked to sign a waiver that waives their rights to guaranteed hours and pay. “I have 36 kids normally,” she said, adding that only 10 had signed the letter. Because of the labor shortage, she won’t be opening either the Seaside Market downtown, or the store at the Boat Basin.
“The probability of breaking even this year is low,” said Shorey.
“We should turn our discussion to ‘how are we going to deal with that’?” said MacMullan.
“On a daily basis we’re having conversations on how to deal with this,” said Wright. “We want to do everything possible to control expenses so we don’t have to adjust rates.” To that end, Wright said they had frozen all discretionary spending, stopping things such as tree trimming, not buying materials for inventory, managing hours for workers so no over-time is incurred, and deferring salary increases, something Wright said the staff had volunteered to do.
The environmental mitigation project planned for the fall is on hold. The project involves the removal of contaminated soil, and although it is eligible for close to 100 percent reimbursement from the R.I. Department of Environmental Management, BIPCo would have to expend the money first, putting a further cramp in cash flows. Additionally, staff at the DEM aren’t available for discussions on the subject.
Peak shaving is also off the table for this summer. Peak shaving is when a utility goes, at least partially, “off-grid” during the time when usage across the New England area is anticipated to be at its highest. During this time, the capacity used by each utility is measured, and a capacity charge is calculated for the coming year based on that usage. The more that can be shaved off the usage, the more that can be saved in capacity charges. Wright said that monitoring equipment was needed to move forward, but it would not be purchased this year.
BIPCo could also file for a rate reconciliation with the R.I. Public Utilities Commission. Wright said a 2-cent increase in the Standard Offer Rate could mitigate about half of the shortfall. He suggested this as a last resort possibility, after cost savings and increasing the Line of Credit, that could go into effect for the month of August, as it involves a 30-day process to apply for.
The Commissioners however felt that if the rate increase went into effect in August, then island residents would bear the brunt of the increase. They were instead, in favor of the increase going into effect with the July bills.
Wright said he would get the numbers together for either scenario for the next meeting.
The Commissioners also discussed and approved having Wright apply for a loan under the Payroll Protection Plan — a loan that if used to cover 75 percent of payroll could be eventually forgiven and essentially become a grant.
Despite everything, Wright encouraged the board to move on with the voltage conversion project. During the summer, some of the circuits, particularly the one that serves the downtown area, are overloaded, and part of that load has been transferred to the Corn Neck Road circuit.
The conversion would be from a “Delta” system to a “Wye.” Delta systems are practically unheard of nowadays and require a different transformer for the substation. If the current one fails, it could take months to have one custom made at a cost of roughly $600,000. There’s also the question of who would pay for it. BIPCo sought, through the PUC, to have the cost (along with other costs of connecting to National’s Grid’s transmission cable) socialized throughout Rhode Island. But, in a ruling finally handed down by the PUC, almost three years to date after receiving a hearing, the PUC, on May 6, denied BIPCo’s request, leaving island ratepayers shouldered with the cost. (BIPCo will be appealing the decision in Superior Court.)
Wright said that if the island went through the conversion, that custom-made transformer would no longer be needed. Another advantage is an increased quality of power, and the avoidance of brown-outs, which can damage appliances. In the new rate structure, that goes into effect June 1, there is a dedicated charge for the conversion that would, under normal circumstances, raise about $60,000 per year, an amount that would cover the debt service for the project, according to Wright.
Balser noted that hotels were installing air conditioning, as were residences. “Power is a real need,” she said. “There’s more and more going on out there.”