UPDATED: New life for wind farm

Thu, 06/10/2010 - 8:30pm
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6/10/10 — The House of Representatives passed a law early Thursday morning that calls on the Public Utilities Commission to revisit the proposed wind farm for within three miles of Block Island.

The House action mirrored that of the Senate, which passed the bill Tuesday night. The House passed the bill 56-15; the Senate, 25-10.

“I’m delighted,” said First Warden Kim Gaffett in reaction.

Gaffett testified in support of the bill before both the Senate and House committees. She limited her testimony to the cost allocation of the proposed cable between Block Island and the mainland that would come with the wind farm project.

While earlier legislation made ambiguous calls for island ratepayers to pay proportionally more for a future cable than the rest of the state, the new law is more specific.

The town’s consultant, Richard LaCapra, helped create the language, Gaffett explained, from considering peak loads on both the island and the mainland.

In simplest terms, the cable, expected to cost about $45 million with a $7 million annual carrying cost — would add an additional $14 annually to island residential bills, and approximately $6 or $7 to mainland ratepayers. That could shift, Gaffett explained, based upon what the actual costs of the cable end up being.

From Gaffett’s standpoint the legislation has three positive attributes: it brings the contract decision back to the PUC (and defines the standard of review for the commission); it allows for an appeals process, and the town now knows approximately what island ratepayers will be expected to pay for the cable.

Town Council member Peter Baute also testified in favor of the legislation.

“Obviously we’re pleased,” said Paul Rich, chief development officer for Deepwater.

He said the law provides an avenue for reviving the Block Island wind farm and caps the power price at 24.4 cents per kilowatt-hour. (In the original contract that number was the opening price, with 3.5 percent escalations during the life of the 20-year contract.) Rich said Deepwater would begin negotiations immediately with National Grid on a modified contract so that the company could “be in service by 2012,” if the PUC approves the contract.

Rich said Rep. Donna Walsh in particular made an eloquent speech supporting the bill on behalf of year-round island residents.

Michael Beauregard, a part-time Mohegan Trail resident and financial expert who has been critical of the wind farm contract, also testified before the General Assembly.

While he agreed that the PUC was the “right organization to be assessing the project,” he was not happy with the process.

He was disappointed that neither the House nor Senate approved amendments that would have expanded the “open book” approach regarding the project’s finances. He said that if the governor and the developer want more transparency then the public should be privy to all the facts — “that’s what open book should be” — and do away with protective orders for some of the financial information.

Rep. Laurence Ehrhardt made unsuccessful attempts to introduce amendments that would call upon more financial disclosure by Deepwater. He also introduced an amendment that called for island ratepayers to fund half of the proposed cable.

Beauregard thinks it imperative that the island acquire a cable to the mainland as soon as possible “through any route.” However, he worries the town has put “all its eggs in one basket” with the wind farm and not exhaustively pursued the possibility of a stand-alone cable. He thinks it would be wise for the town “to hedge that” in the event the wind farm is “derailed or delayed.”

He offered a critique of the process.

“While I am happy that the prospects that Block Island may still be able to get its long sought-after cable, I think that the process that the General Assembly went though is not a model for good government,” Beauregard said. “ The fact that the General Assembly felt comfortable passing a law that suggests the PUC should ‘try it again until they get-it-right’ is absurd…. I am concerned that, if other regulatory bodies who surely will be involved in this process, like the CRMC, Army Corps, etc., reject or deny a permit, the General Assembly will simply legislate over the independent regulatory bodies in place to protect against political or corporate agendas.”

PUC Chair Elia Germani declined to comment on the bill.

Jerry Elmer, attorney with the Conservation Law Foundation, said that while his organization “recognizes and appreciates the significant improvements” in the new bill, it ultimately could not support it.

Elmer’s concerns were that the law was designed to undo a past PUC decision, which is “a poor process that risks giving renewable energy a bad name.” Also, he said the bill was designed to help one specific developer. “This is the opposite of a fair, level playing field,” he said. He also objected to it “being jammed through the legislature in the closing days of the session in an expedited way that does not permit thoughtful consideration.”

Attorney General Patrick Lynch, an outspoken critic of the new legislation, said the new law was “making the PUC Deepwater’s rubber stamp for a pre-rigged outcome that will be disastrous for Rhode Island ratepayers and businesses, costing them nearly $400 million above the market price of electricity over the next two decades.”

Block Island’s senator, Susan Sosnowski — who was a sponsor of the Senate version of the bill — said she was quite pleased with the votes in both houses, especially in the face of “bad press” and objectors who “repeated the same mantra.” She said that the matter was “rightly back before the PUC, where it belongs.”

She took offense to Lynch’s denunciation of the bills, even after the changes, which she said were hard fought and reflective of the comments her committee received. She said the law gives the PUC “what they asked for” — essentially a more expanded toolbox from which to consider the contract.

Try, try again

The legislation appeared in the wake of the PUC’s March rejection of the first power contract reached between Deepwater Wind and National Grid as a method to keep the wind farm project alive.

The initial language in the legislation was subject to much criticism — characterized as a brazen attempt to subvert the PUC’s authority.

Earlier this week a revised version of the bill appeared that would do away with the much criticized route of allowing four governor-appointed agency heads to weigh a modified contract between Deepwater and National Grid. The new law will call for the PUC to take up the contract again, but to expand the scope of its review to allow for consideration of the state’s efforts to grow a renewable energy industry.

It would also require the PUC to expedite a decision — within 45 days of the submission of the new contract.

“The commission shall review the amended power purchase agreement taking into account the state’s policy intention to facilitate the development of a small offshore wind project in Rhode Island waters, while at the same time interconnecting Block Island to the mainland,” reads the bill.

The PUC is charged to approve the contract even if there are less costly sources of energy available; similarly, the commission is charged with passing the contract if it demonstrates that it would provide economic and environmental benefits and a price lower than the originally reached 24.4 cents per kilowatt-hour.

The new bill would also fine tune the ambiguous term “commercially reasonable” to mean: “terms and pricing that are reasonably consistent with what an experienced power market analyst would expect to see for a project of a similar size, technology and location, and meeting the policy goals ….”

It also calls upon Deepwater Wind to provide funding “for the Economic Development Corporation to hire an expert experienced in power markets, renewable energy, project financing, and power contracts who shall provide testimony regarding the terms and conditions of the power purchase agreement to assist the commission in its review, provided that the developer shall be precluded from influencing the choice of expert….”

The expert would provide testimony in the hearings.

The PUC would be required to hold one public comment period, and then to hold evidentiary hearings within 30 days of the filing of the new contract.