PUC issues order for wind farm contract:Appeals expected Monday

Mon, 08/23/2010 - 4:00am
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08/21/10 - The state Public Utilities Commission issued its written order in the Block Island wind farm matter late Monday. The document is the agency’s official approval of the Power Purchase Agreement reached between National Grid and Deepwater Wind for electricity generated from the proposed eight-turbine wind farm within three miles of Block Island.

Last Wednesday the PUC voted 2-1 in favor of a contract that was similar to the one all three commissioners had rejected in March as “commercially unreasonable.”

In the wake of the rejection, the state General Assembly created a law that directed the PUC to consider a modified contract, while also providing a definition of “commercially reasonable.” The law said the PUC was to give “substantial deference” to the advisory opinion of the R.I. Economic Development Corporation (which found that the farm could inject $129 million into the state’s economy) and that only the economic benefits — not costs — could be weighed.

In the written order, Chairman Elia Germani and Commissioner Paul Roberti each provided two-page explanations for their votes approving the contract.

Germani pointed to the requirement that only “economic benefits” were to be considered, as well as the great weight that was to be given to the EDC opinion. Given these, Germani concluded that the contract “will likely provide the economic development benefits as set forth in the law.”

In his opinion, Roberti points to how the language of the law led to his conclusion, which he says was “bolstered by the substantial deference I am constrained to apply to the EDC’s conclusions, which omit any findings relative to economic detriments to existing businesses.”

The lone dissenting opinion came from Commissioner Mary Bray. She pointed to the $370 million in above-market costs that ratepayers would have to shoulder over the life of the 20-year contract. She also voiced skepticism over how Deepwater’s testimony changed regarding what the farm would cost. In the first contract hearings, Deepwater CEO William Moore said the farm would cost $219 million; in the latest round, he said it would cost $205 million. The cost is noteworthy because the new contract directs any construction savings to the ratepayers.

“This conflicting testimony is not credible,” writes Bray. “A credible party does not give one set of figures to regulators and legislators, and then a couple months later present another. It appears somebody was not being forthright with the regulators or the legislators on this issue.”

She concludes by supporting the groups that are likely to challenge the contract.

“During [the PUC’s] routine rate cases, the commission regularly decides disputes, but usually the amount in question is no more than a few million dollars. However, the contract approved in this proceeding, the public will be paying hundreds of millions of dollars more in energy costs for two decades which will not be offset by economic benefits…Much of this case seemed to turn on the proper interpretation of the law. I am hopeful the [the Supreme Court] will agree with interpretation.”

The Conservation Law Foundation and Attorney General Patrick Lynch are expected to file appeals of the decision, and the law that paved the way for it, with the state Supreme Court Monday. TransCanada, a Canadian energy supplier that also challenged the constitutionality of the wind farm law in the PUC, would not say if it plans to file an appeal also.

How quickly the Supreme Court would act is an open question. While the General Assembly’s law directed the PUC to render a decision in 45 days, it does not have the same power over the Supreme Court. The law says: “the Supreme Court shall advance any proceeding …so that the matter is afforded precedence on the calendar and shall be heard and determined with as little delay as possible.”

In the Champlin’s Marina expansion matter, a year passed between the Superior Court and Supreme Court decisions.