Deepwater wins appeal in Supreme Court

Company says appeal could delay wind farm construction to 2014
Fri, 07/01/2011 - 8:15pm

The Rhode Island Supreme Court has affirmed a power purchase agreement between Deepwater Wind and National Grid for a proposed wind farm three miles off Block Island, but the delay created by the court appeal means that the company might not be able to take advantage of an important federal tax credit set to expire in 2012.

Deepwater Wind CEO Bill Moore said he  was pleased by the court's decision, but hopes that Washington votes to extend the credit. "It is hard to make the economics for these smaller projects work without it," Moore said. "It is awfully important and we have our fingers crossed."

The unanimous decision, which was released by the court Friday afternoon, expresses some concerns over the proposed wind farm and the process the legislature took to compel the Public Utilities Commission to approve it. But ultimately all five justices found that it followed Rhode Island law.

"Although we view with trepidation the General Assembly's unwavering quest to sink this demonstration wind farm into the sediment of Rhode Island's continental shelf," reads the written decision, "we nonetheless are constrained by our review..."

Moore said that the company is encouraged by the result of the appeal and will complete the remaining environmental and engineering studies in time to submit a permit application for construction of the 5-turbine wind farm by the end of this year.

"We never know how these things will turn out," said Moore, "but obviously we still feel strongly about moving forward with the Block Island project."

Toray Plastics and Polytop Corporation, the two Rhode Island based manufacturing companies who appealed the approved PPA, noted that it would raise their electric rates because the power generated by the wind farm would be roughly three times higher than power from conventional sources. They argued that the resulting hike — estimated to be about 2 percent — would mean the project is not "commercially reasonable," a requirement under the Rhode Island law that set up the review process for the wind farm.

The court found that the testimony provided to the PUC, which argued that the project was commercially reasonable, was enough to justify approving the PPA. It also noted that "typically, this court does not question fact finding by the commission."

The PPA was originally denied by the PUC last spring. The General Assembly then passed a controversial law, which compelled the PUC to reconsider the contract based on a new definition of "commercially reasonable," which it then approved in a split decision.

Following the PUC's approval, several parties filed appeals with the Supreme Court. Along with Toray and Polytop, the Attorney General at the time, Patrick Lynch, and the Conservation Law Foundation joined in the appeal.

A new attorney general, Peter Kilmartin, was elected this fall and withdrew the appeal filed by the former AG. The Supreme Court then called for a hearing to review whether the remaining parties had standing to appeal the decision. It found that Toray and Polytop had standing, but that the Conservation Law Foundation did not.

Now that the appeal has concluded, Deepwater will begin the permitting process, which is handled by the Army Corp of Engineers and will also involve the state's Coastal Resources Management Council.

Moore said that because of the length of the appeal, which took more than a year to be resolved, the wind farm might not be constructed until 2014, although it is still aiming to have the project complete by 2013.

The original time frame estimated that the wind farm would be installed and operational by 2012, which Moore now says is out of the question.

If the Block Island project is not substantially underway by the end of 2012 it would not qualify for the Federal Energy Investment Tax credit, which is set to expire at the end of that year, unless Washington — despite the current era of fiscal austerity — votes to extend it.

Moore also said that the transmission cable that would connect Block Island to the mainland is in the design process and Deepwater will apply for the necessary permits to install it by the end of the year. He estimated that the cable will cost between $45 million and $55 million.