Wind farm cost raises concern 

Critics of the wind farm proposed for the waters off Jones Beach yesterday demanded that the Long Island Power Authority fully disclose the real costs for the project and the impact on electric bills.

With outside estimates that the total cost of the wind farm’s construction could range from $250 million to more than $1 billion, Suffolk Legis. Wayne Horsley (D-Babylon) and regional economist Martin Cantor said Long Islanders are being left in the dark about the potential costs of the 40-turbine project, which Cantor said could wind up to be “another Shoreham.”

LIPA has indicated it would respond in coming weeks. “Once I understand what the numbers are, yes, I will share the numbers with the public,” LIPA chief executive Richard Kessel said this week, adding that the release could come by the end of May.

Meanwhile, a first draft of the federal government’s environmental assessment of offshore energy projects has found wind-farm development and production in general are likely to have a “negligible to minimal” impact overall.

That assessment angered Babylon Supervisor Steve Bellone, who said he worries that a similar assessment by the same federal agency, the Minerals Management Service, will overlook numerous concerns his constituents have about costs and environmental harm the wind farm might wreak. The draft report “confirms our worst fears about MMS, an agency that is racked by scandal and incompetence,” Bellone said.

MMS spokeswoman Nicolette Nye responded, “This is a draft document, which is currently open for public comment, both positive and negative.” She said the agency “welcomes any input from the public on [the draft report] that we can use to develop and refine the final” environmental impact statement.

Kessel said he expects to meet with FPL Energy, the contractor for the wind farm, in coming weeks to get the latest figures for the project, which are subject to change because a final contract has not been signed. He explained that the project had previously been spearheaded within LIPA by former chief of staff Ed Grilli, who retired last month.

The authority is preparing a response to a report critical of the wind-farm costs released this week by the Long Island Economic and Social Policy Institute at Dowling College, an institute of which Cantor is director. The study found the wind farm would enrich FPL with “excessive” profits and saddle ratepayers with exorbitant electric rates.

Kessel said the authority is investigating who is funding the institute, whether that funding was used to finance the study, and where the institute got its data. Newsday reported on Sunday that the institute has received $50,000 in campaign funds held by former Suffolk County executive Robert Gaffney, now Dowling’s president. “This is a study that has the blessing of Dowling,” Kessel said. “Where did the money come from?”

He said LIPA is studying the costs of the FPL wind-farm proposal. LIPA chairman Kevin Law first broached the plan at a LIPA trustees meeting in March. LIPA has previously declined to release wind-farm costs, and released outdated figures to Newsday last summer in response to Freedom of Information Law requests. LIPA’s data showed that FPL Energy won bidding with an initial price of $356 million.

Dowling’s study cited that figure. The study said FPL shareholders could enjoy a return on investment of 42 percent to 45 percent, while ratepayers would be forced to pay escalating costs that topped off at $187.68 a megawatt hour after 20 years. That’s about 19 cents a kilowatt hour by the 20th year of the project. An average LIPA residential customer now pays 7 to 8 cents per kilowatt hour. But FPL in a 2005 letter to LIPA indicated that construction costs since the 2003 estimate saw a “substantial” increase, and asked that five years be added to the contract.

Dowling economics professor Mark Greer said that since the project would pay for itself in about six years, another five years would provide an additional windfall for FPL. Kessel has called the study’s conclusion’s “way off base.”

If that’s the case, said Cantor, “I challenge them to open up their numbers and show us how bogus the numbers are.”

Utility veteran Matthew Cordaro, acting dean of the College of Management at Long Island University, also questioned the numbers in the report but said the conclusions – that the wind farm is overpriced, and that tax-free debt financing by LIPA is a more viable option – were “right on target.”

Cantor, a longtime friend of Kessel, said, “What we’re saying is get the numbers out so we can evaluate it.” He added that LIPA thrice rejected the institute’s requests for data and analysis on the wind farm.

Gordian Raacke, executive director of Renewable Energy Long Island, which has an annual contract with LIPA in support of the agency’s solar energy program, said he could not comment on the study because, “I don’t know where the numbers come from.” But, he added, if analysis and recommendations “lead to lower costs for this project that’s a good thing.”

By Mark Harrington

newsday.com

6 April 2007