BIPCo holding steady as fuel costs rise
“This topic is so complicated that most people don’t understand it enough to comment on it,” said resident and ratepayer David Lewis at the meeting of the Block Island Utility District on July 28.
Lewis was speaking about net-metering, the mechanism by which ratepayers that generate solar power get credited for their excess production, but he could have been referring to any one of several topics related to the powering of an island.
Complicating the issue is another confusing term: avoided cost. As more and more people wish to add solar arrays to their homes, developing a policy to compensate them without putting the company and other ratepayers at risk is tricky.
The state of Rhode Island has a law that limits the amount of production by solar installations at three percent of the “peak” amount of energy the power company needs to deliver. For the Block Island Power Company, that peak is reached in the summer, typically on a day when there is excessive heat. So far, the peak this year was reached on July 22 with a load of 4.92 megawatts.
For Block Island, that three percent was reached a few years ago and there was a moratorium on people who could sign up for net metering.
Last year, the Rhode Island General Assembly passed legislation allowing the Block Island Utility District and the Pascoag Utility District to set their own percentages, but that also meant that a new tariff had to be developed for additional customers. That new tariff also had to be approved by the Rhode Island Public Utilities Commission.
In seeking the new tariff, the Utility District chose to grandfather existing solar arrays under the old net-metering tariff. New solar producers would be compensated at avoided cost, which is less than the full retail price that net-metered people receive. The major difference is that under avoided cost, the customer still pays most transmission charges – the cost for the utility to maintain its network of poles, wires, transformers, line-crew salaries, and plant costs. Under net-metering, the customer doesn’t contribute to the transmission costs, so the remaining ratepayers are essentially subsidizing them.
The PUC didn’t like the disparity in treatment, and asked the Utility District to revisit the old tariff. And they aren’t the only ones unhappy with it.
During the public comment portion of the meeting, Stephen Record said that the new tariff removes all of the “incentive” for a homeowner to install solar, as there was no return on investment. “It’s a non-starter,” he said.
It was noted that some people receive grants from the Block Island Solar Initiative to help them with the cost, but they need to meet certain income limitations.
Utility Board Chair Barbara MacMullan said that what one person may call an “incentive, others call a subsidy.”
“I don’t feel any impetus to subsidize people,” said Lewis. “I don’t expect other people to fund my personal charities. I probably represent many other people on the island.”
Summer resident Peter Kinoy said he was “kind of new to this discussion,” but he was thinking about adding solar at his home on Corn Neck Road, although he was finding it “cost-prohibitive.” With every summer getting hotter due to climate change, he said he thought the board should try to do “everything possible to encourage solar.”
“That’s not a theoretical goal,” said MacMullan. “That’s a real goal. Should the policy be to subsidize solar? When we have 1,800 members... we have to balance it for everyone.” She added that with the lift of the three-percent cap, the utility was now almost at 10 percent. “That’s tripling” the amount of solar, she said.
“We want as much solar as we can get,” said Wright. “How can we get more?”
One of the current limitations on solar is the inability to save it. If it’s not used during the day when it’s produced, it goes to waste. But, that may change with the addition of a utility-sized storage battery. Acquiring one, or at least exploring the option has been on the Utility District’s plate for a while now. It’s a rapidly changing industry, both technically and cost-wise.
Wright reported that he had received an offer from the Solar Initiative to contribute 75 percent of the estimated $38,000 cost of hiring a firm to put out a request for proposals for a battery storage system and to evaluate the results. Wright said: “We have benefited from the Solar Initiative before,” with the donation of a rooftop solar array at the power company’s plant.
As for the cost of the battery system, there is grant money available for a portion of the cost. Wright said the Solar Initiative was also committing $250,000 in matching funds for the grant, if received. “In a year to 18 months, we could have a utility-sized battery storage system,” said Wright.
Upon discussion, the board voted to go ahead with the agreement to engage Fractal Energy Storage Consultants to issue and evaluate the RFPs.
That wasn’t the only good news Wright had. “It’s like Christmas,” he said. “When I had my meeting with [the anonymous donor behind the Solar Initiative] he said ‘that’s great but I want to do something greater.’” And with that, Wright announced that the power company would be receiving a new electric bucket truck – and it would be only the eighth one in the United States.
A regular bucket truck costs about $300,000 these days. An EV one is just under $620,000. “I don’t think I’ve ever been so excited since I came here,” said Wright. “I can’t thank you enough,” he said to the Solar Initiative’s program director, Wade Ortel, who was at the meeting.
“All ratepayers should be grateful for the truck,” said BIPCo lineman Evan Carey. He added that the new truck could go higher than the old ones, making it safer for the linemen who wouldn’t have to actually climb to the top of the higher poles anymore. “It’s not just a toy. It’s unbelievable to get a truck like that.”
New power supply contracts
The Block Island Utility District has dodged a bullet when it comes to the impacts of escalating fuel prices. The district enters into contracts to purchase electricity from power producers that feed it into the New England Power Grid.
Since turning off the diesel generators that burned a million gallons of fuel per year, the Utility District has entered into a series of contracts to source its electricity, developing a portfolio that utilizes natural gas, solar,and hydro. Each contract is for a set period of time, at a set price.
For the Block Island Power Company, its largest contract is for natural gas, which of course has increased dramatically in price. However, Wright was lucky, or wise enough to secure the current contract for natural gas before a huge price spike. Another challenge is to determine just how much energy is needed. To contract for more than the utility needs is money wasted. To contract for less is risky because the gap can mean the utility has to buy its energy on
the “spot market.”
Wright secured new contracts with Shell North America on July 6, at a price of $65.25 per megawatt hour, up from $49.90 in the previous contract. However, just after July 6, the price to buy electricity on the spot market in New England rose to $600 per megawatt hour.
“I feel very good that we acted when we did and with the pricing we got from Shell,” wrote Wright in his President’s report. “If we had waited even another week, the outcome could’ve been different.”
Even though the price has increased, BIPCo is seeing savings coming from other areas. The grid charges a “capacity charge” to each utility based on its annual peak usage, but those costs have decreased in the past couple of years. But even more significantly, the power company’s recent voltage conversion project has reduced line losses by almost a third, so the company doesn’t need to buy as much energy to meet its needs.