Will LNG proposal offset Deepwater rates?

Sun, 08/18/2013 - 2:00pm

A question was posed at the Town Council meeting on Wednesday night: would Block Island Power Company’s proposal to switch to a new fuel mitigate the cost savings from Deepwater Wind’s proposed Block Island Wind Farm?

No answer was forthcoming on the Deepwater question just yet at the meeting, at which the members of the Electric Utilities Task Group were present. However, Deepwater CEO Jeff Grybowski has said in the past that BIPCo’s plans would not affect Deepwater’s plans. “We’re going to proceed with that project regardless of what BIPCo’s doing,” he told The Block Island Times in May.

The Block Island Power Company (BIPCo) has a proposal to generate some of its power using Liquefied Natural Gas (LNG). According to Clear Energy, the company that would provide the LNG, this switch would save the power company about $300,000 to $500,000 annually — savings that would then be passed on to the power company customers.

At the same time, Deepwater Wind has a proposed project to install a five-turbine wind farm off the coast of Block Island. The EUTG has projected in the past that this project could cut the island’s electricity costs by up to 40 percent. This projection had been made using Block Island’s current electricity costs, which take into account the charges using diesel fuel.

“That change in fuel source makes a significant impact on the initial proposal by Deepwater as it pertains to the cost savings for the ratepayer, the effect on the environment, those kinds of things,” suggested Town Councilor Sean McGarry, who asked that the EUTG re-evaulate its cost savings projections for Deepwater.

McGarry referenced a letter sent to him from island resident Michael Beauregard (see Letters, page 28). Beauregard calculated in his letter what the savings to Block Island would have been if BIPCo generated all of its power using LNG. According to his analysis, there would have been a 20 percent savings to Block Island if BIPCo used all LNG fuel.

BIPCo has said in the past that it currently plans to convert to 50 percent LNG, not 100 percent.

But members of the EUTG said that there were too many unanswered questions about the LNG proposal to come up with a clear idea of how it would affect Deepwater’s savings.

“We need more information from Clear Energy and BIPCo about what the estimated savings is based on,” said EUTG Chair Barbara MacMullan.

“We don’t know whether those [savings] estimates would include the cost of engines,” said EUTG member Everett Shorey. BIPCo has said it plans to purchase a new engine for the LNG production.

Shorey later added that despite the fact that the EUTG has a lot of questions about the LNG proposal, this does not mean that the group is opposed to the project. “I don’t want the tone to suggest we think it’s a bad idea,” he said. “It might be a good idea, but there’s an awful lot of stuff that’s not nailed down.”

The Town Council directed the EUTG to further research the affect LNG will have on Deepwater’s potential cost savings.

Other energy issues

The council also directed the EUTG to look into two other issues. One, the EUTG will look into possibly purchasing the streetlights from the power company, which currently owns and operates the streetlights, and converting the lights to a more efficient LED (light emitting diode) technology.

Second, the EUTG will also refine its future projection of what it would cost BIPCo to buy electricity, if and when the Deepwater is installed. Councilor Chris Warfel raised concerns about the accuracy of past projections.

Several other issues were discussed at the council meeting related to electric utilities.

The council and EUTG discussed whether the groups should consider creating an electric utility co-operative. The EUTG suggested that the council look into state legislature to see how such a co-op could be established.

Also discussed at the meeting was net metering, a policy that credits customers that produce energy (for example, a privately-owned wind turbine).

BIPCo is currently exempt from net metering regulations set by the R.I. Public Utilities Commission, and the company provides net metering on a voluntary basis.

The EUTG has recommended that instead, BIPCo be included in the Rhode Island regulations. The Town Council has agreed to further research this issue.

The Town Council also briefly discussed a report that had been issued by Stanley White Engineering, a consultant hired by the town to review the decommissioning of Deepwater Wind’s wind farm. Stanley White Engineering looked at what would be the best method to pay for removing Deepwater’s turbines, should the wind farm not be operational and need to be removed at any point after installation.

“We want to make sure we are prepared if and when we get to the hearing process,” said First Warden Kim Gaffet. “The point of this study was to make sure the monies needed to remove the turbines are there.”

Deer Task Force update

Also at the Town Council meeting, there was an update from members of the Deer Task Force about their work with the R.I. Department of Environmental Management (DEM) to reduce the island’s deer population. (See related story, page 1)

“We feel good that we have working relationship with the Department of Environmental Management,” reported task force member Becky Ballard. First Warden Kim Gaffett noted that this is the most collaboration that has been done between the town and the DEM.

The discussion between the DEM and Deer Task Force members has not been open to the public, and Town Councilor Chris Warfel expressed that he wished it could be.

Finance Report

Town Finance Director Amy Land presented a series of data and graphs to the Town Council. This information, which was provided in response to a request from Councilor Warfel, illustrates the town’s budget and spending trends since 2005. The graph shows what areas the town is increasingly spending more money on. Councilors said they found this information helpful, but agreed they wanted more time to review the information.

The Town Council also had a discussion about its own process of prioritizing agenda items, and brainstormed ways to keep better track of its past and future agenda items.