EUTG hears update on Deepwater cable

Fri, 03/28/2014 - 2:00pm

This month’s meeting of the Electric Utilities Task Group, held Monday, March 24, opened with an update from Bryan Wilson of Deepwater Wind. This month the update was brief, with only two items to report.

The first item was an update on the status of the OSAMP (Ocean Special Area Management Plan) subcommittee of the Coastal Resources Management Council. Although the subcommittee has finished holding its public hearings on the Deepwater Wind Block Island wind farm, Wilson reported that he had not yet seen a posting for a workshop to be held by that committee for the purpose of making a recommendation to the full CRMC. However, Wilson told the EUTG that the subcommittee had promised to hold their workshop “with-in the month.” (OSAMP later announced the work session would be held on April 3. See page 1 for the story.)

The second item had to do with a docket filed March 13, with the R.I. Division of Public Utilities and Carriers (Docket D–14–20). The docket, technically filed by National Grid, concerns a purchase agreement between National Grid and Deepwater Wind for the purchase of the distribution cable that would run between Block Island and the mainland. Under Federal law, Wilson explained, the distributor of the power is required to own the distribution cable and related “real estate.” In this case, the real estate would include a portion of the sub-station to be located at the Block Island Power Company.

The total purchase price would be $75 million, of which $59 million is estimated for building costs and $9.5 million to reimburse Deepwater for costs incurred to date. The remaining $10.5 million would be “in expectation of future costs.” Although Deepwater would receive the proceeds, they would then hire National Grid as a sub-contractor to build the cable.

EUTG member Everett Shorey asked if the $75 million was a “soup to nuts” price for the cable, and Wilson said that it was. Shorey then asked Town Manager Nancy Dodge if there would be any public hearings on this matter and she replied that she thought that the process was purely administrative, but that she would check. She and Wilson both noted, however that if approved by the Division of Utilities and Carriers, the agreement would then have to go to the Federal Energy Regulatory Commission (FERC).

First Warden Kim Gaffett, also in attendance, asked about the other cable that would connect Block Island to the wind farm itself. Wilson explained that since that cable was considered part of the generation side, it and a portion of the sub-station would remain the property of Deepwater.

As for updating the EUTG on the current time-line for the project, Wilson reported that as of now, construction of the cable and turbines would occur in 2016, with the “switch being flipped” hopefully later that year.

Net metering policy

At its last meeting, the EUTG had settled on a motion to send to the Town Council recommending them to negotiate with BIPCo to include all customers, including commercial and municipal ones that are currently excluded from net-metering, in the policy; to change the “true-up” period, wherein energy used is compared to energy produced, and to rate PV (photo voltaic) systems at 80 percent of their mandated capacity when calculating the three percent cap.

Barbara MacMullan reported that the Town Council had gone along with the EUTG’s recommendations and that she had talked to Al Casazza and Cliff McGinnes Sr. of BIPCo regarding the proposed adjustments. She was told that BIPCo did not want to further change the net metering policy at this time. She was told, however, that BIPCo would review their net-metering policy, which is voluntary, when the cable from the mainland goes in.

“That’s too bad” said Shorey, before going on to say that the 80 percent discount for photo-voltaic systems didn’t matter at this time since “we’re nowhere near the cap.”

Electricity options

Shorey told his fellow members of the EUTG that he had decided to look again at the EUTG’s analysis of the relative economics of different energy strategies in light of the comments made at, and subsequently to, the CRMC’s public hearings on the propose wind farm. The options studied included constructing a stand-alone cable to the mainland versus a range of options including wind, solar and conservation.

“We either do nothing or reaffirm the analysis that we gave to the Town Council before,” Shorey.

That analysis had concluded that Deepwater Wind was still the best option, and the task group agreed that they would reaffirm their position to the Town Council.

Then Shorey read aloud a letter that island resident Chris Warfel had sent to the task group that he requested be entered into the official minutes of the meeting. (Warfel was unable to attend the meeting.) The letter related to Warfel’s own analysis of the cost of various power generation options (see Featured Letter in The Block Island Times’ March 8 edition). In his letter to the EUTG, he expressed his disappointment with the group’s response, or lack thereof:

“It is disturbing that I provided this work a long time ago with the expectation of a discussion of its assumptions and calculations, and this is basically the first response to this information… Again, I hope everyone included on this email understands no questions were ever asked to clarify my work.”

Shorey said that: “No statement in that letter is accurate.” Going on to detail various flaws in Warfel’s analysis he stated: “It’s not in our purview to debug his model.” Then he said that his own family “tells me I am ‘frequently wrong and rarely in doubt.’”

With respect to a standalone cable, the EUTG had estimated that at a cost of $30 to $35 million, it would “break even” but any more would increase the cost of power for customers.

Bill Penn brought up the possibility of “socializing” the cost.

Harkening back to the $75 million “soup to nuts” cost of a cable discussed earlier in the meeting, “The notion that there’s a $25 million cable out there that we could build ourselves is false,” said Shorey, and as far as the possibility of socializing the cost, “What is the probability of a $50 million subsidy from Rhode Island voters? Nothing has caused me to change my opinion.”

Others agreed that Deepwater was still the best option and Barbara MacMullan said it would “Probably be good idea to write it up and formalize it. The dollar flows are getting mixed up with the power flows.”