Deepwater/National Grid contract expired?

Tue, 10/04/2011 - 8:15pm

Manufacturers that oppose an agreement between Deepwater Wind and National Grid for the sale of electric power generated by a proposed wind farm off Block Island have filed a complaint with the state alleging that the agreement has expired.

The Power Purchase Agreement, approved by the Public Utilities Commission last year, may have lapsed as of June 30, says Toray Plastics. In the 2010 agreement, a clause was added that would terminate the agreement on June 30, 2011, if the PUC had not approved the contract by then, with all appeals concluded.

“At the time the PPA was executed, the one-year period was thought to be an adequate period of time for the Commission to approve the PPA and for any appeals to be resolved,” said National Grid in a letter to the PUC. “Such time limits are customary in agreements, such as the PPA, in order to protect the parties from being bound to a contract for an indefinite period of time.”

An appeal to the Rhode Island Supreme Court did not conclude until July 1, one day later than the date specified. National Grid and Deepwater filed a waiver of the provision in the PPA that caused the lapse of the contract and notified the PUC last week of that action.

The agreement "has been in effect and still is, and both Deepwater and National Grid agree on that," said Deepwater chief administrative officer Jeffrey Grybowski. "Toray's latest gambit to delay this project is absolutely ridiculous."

According to National Grid spokesman David Graves, the waiver is an "administrative process," and "as far as National Grid and Deepwater Wind are concerned the contract is still good."

However, attorney Mike McElroy, representing Toray Plastics — one of the parties who appealed the PPA — has filed an objection to the waiver saying, “Since the waiver provision is part of the PPA, and the PPA automatically terminated on June 30, the waiver provision also terminated at the same time.”

According to a letter sent by National Grid to the PUC, the waiver was executed on June 30 and it requests that the commission affirm the waiver and confirm that the PPA remains “in full force and effect.” According to PUC spokesman Tom Kogut, the waiver would need to be approved by the commission and was not received until September 29. Whether this action is allowable retroactively could be a “key legal issue,” according to Kogut.

McElroy argues in his objection that the waiver is not legally permissible and has asked that the PUC hold a hearing to discuss the issues surrounding the waiver. What procedure the PUC will take in resolving this matter is still being determined.