Wind farm blamed for higher mainland power rates
The Newport City Council recently passed a strongly worded resolution asking the Rhode Island Public Utilities Commission about a recent jump in mainland electric bills, which is being blamed, in part, on costs associated with the Block Island Wind Farm.
At its Jan. 10 meeting, the Council unanimously passed Resolution 2018-01, which states that “Newport residents, as well as residents of other Communities, have received new electric and gas bills that are giving them anxiety and sticker shock due to huge increases; And... the new distribution charges are increasing bills by huge percentages and are compromising residents’ ability to pay necessary life expenses for rent, food, medical needs; And... the RI PUC’s decision to put the significant increase in renewable power costs from off-shore wind and net-metering into the Distribution charge and not the Power Charge so that consumers cannot opt to purchase equivalent power from outside Rhode Island as provided by law...”
The resolution was spearheaded by Newport resident Benjamin Riggs, who has been a vocal opponent of the Block Island Wind Farm for years. Riggs is contending that the costs associated with the Wind Farm are due to the fact that mainland customers are helping pay for the transmission cables that connect the island to the mainland, and that National Grid is purchasing power produced by the wind farm at a fixed wholesale price above the market rate, with those costs being passed along to its customers.
“The genesis of this was that Deepwater was obviously the culprit, and its $650 million (over 20 years) above-market cost is getting dumped into the Distribution charge as per a prior decision by the PUC with respect to the original Deepwater/NGrid PPA (Power Purchase Agreement),” Riggs said in an email to The Block Island Times.
In a letter written to the Federal Energy Regulatory Commission that he sent last October, Riggs detailed what he believed are the issues with the 20-year PPA, which he called a “continuing violation of the Federal Power Act and PURPA (Public Utilities Regulatory Policies Act) that is expected to go on for another 19 years and at this point can only be addressed by an enforcement action initiated by the FERC.”
Riggs wrote that the PPA “provided for the state utility, National Grid, to purchase 100 percent of the output of Deepwater Wind’s offshore windfarm at a fixed wholesale price (with annual escalations) that amounted to 4 to 5 times the market rate for alternate energy, including renewables. National Grid would then resell the power at market rates and recover the difference from Rhode Island ratepayers, payable not as an energy charge, which would allow consumers to opt for alternate power sources, but as part of the distribution charge.”
Block Island Power Company President Jeffery Wright said in an email the specific grievances expressed by the Newport Council are not applicable to Block Island, but he also said he understood how ratepayers on the mainland would be frustrated with National Grid.
“I have read the Newport resolution and my thoughts are that 1) they are protesting any further rate increases by Grid in general, and 2) they are objecting to the way Grid is treating the Block Island Wind Farm and net-metering energy costs. It appears they are socializing that cost through their Distribution charge instead of their Standard Offer charge, which prevents retail choice customers (who select an energy provider other than National Grid), from avoiding their share (as a National Grid customer) of those socialized costs. The question isn’t whether or not the resolution has any impact to Block Island but rather, I believe, lends support to our recent questions and criticisms of National Grid for failing to responsibly manage their costs associated with the interconnection costs that we incurred in May 2017 when we connected to their system. Block Island Power Company feels Newport’s pain having been subject to costs we felt were unreasonable. I credit them for making their voice heard.”
The “managed costs” Wright mentioned refers to the final price of the Block Island substation National Grid built for the wind farm connection, which came in at $1.8 million, almost $1.3 million above the original estimate. Late last year the PUC ruled that cost would be borne entirely by Block Island ratepayers. It was not lost on Wright that if the PUC had ruled in favor of Block Island, the fact that mainland ratepayers would have had to help pay for the substation would have added another item to the list of grievances Riggs cited as wind farm costs mainland ratepayers are having to pay.
Wright pointed out, however, that the cost of developing alternative energy sources is not always less expensive.
“We also understand the importance of implementing renewable energy programs to lessen this country’s reliance on fossil fuels, and that sometimes comes at a higher cost than traditional fuel sources,” Wright said. “It’s a real balancing act between cost and supporting the build-out of clean renewable projects that often goes unappreciated. In my mind, Block Island is trying its best to find that right balance.”
The Newport Resolution also underscored the burden of high energy costs in this part of the country in its argument to the PUC for some relief. The reference to National Grid’s “new request... for greater increases” refers to National Grid’s pending rate case requesting a six percent increase in electric rates and a five percent increase in gas rates.
“[U]tility bills in the Northeast affect the health and safety of residents and their families; And... the PUC granted National Grid recent huge increases and will be reviewing a new request by National Grid for greater increases; And Public hearings will be held regarding the new rate filing request by National Grid; And... National Grid is a Scottish company operating in the U.S.; Now, therefore be it... that the City Council of Newport requests that the RI PUC do its due diligence on lessening the impact of these huge utility cost increases by advocating for the Public and considering re-allocating necessary increases into the Power portion of electric bills where they belong...”
The Resolution also asks the PUC to “explain specifically what the exact sources of these cost increases are attributed to” while asking that the “R.I. Legislature and Congressional Delegation look at ways to lessen the financial burden on families.” The Newport Council asked for supporting resolutions from Middletown and Portsmouth, and to have the resolution read into the minutes during the public comment period at an upcoming PUC meeting.
Lt. Gov. Dan McKee has also written PUC Chair Margaret Curran saying that the PUC should factor in the recent tax overhaul passed by Congress in December as a reason for adjusting National Grid’s proposed rate increase requests downward.
“Unless the PUC adjusts NGrid’s rates to properly reflect this tax reduction, NGrid’s ratepayers will be substantially overpaying and NGrid will receive an unjust and unreasonable windfall,” McKee wrote.
It was reported this week that National Grid had lowered its rate increase by $25 million due to the expected savings it would receive under the new tax law. The move was praised by Gov. Gina Raimondo, an opponent of the new tax law, while the Division of Utilities and Carriers stated it would “independently analyze the impact of the change in new tax law on the revenue request from National Grid…”