Governor Carcieri announced yesterday that “with much regret” he has vetoed a key renewable-energy bill passed by the General Assembly that was designed to foster private investment in major projects and shift the state away from its reliance on traditional fossil fuels.
The veto drew immediate criticism from leaders in the General Assembly, as well as from environmental groups and a potential solar-farm developer who said the legislation would have pushed Rhode Island into the forefront of renewable-energy development.
“By vetoing this bill, the governor is vetoing the most significant clean-energy effort in Rhode Island history,” said Senate President Joseph A. Montalbano, the original sponsor of the bill.
While the governor and legislative leaders agree on the need to bring more renewable energy to Rhode Island to stabilize electricity rates at a time of surging energy costs, the governor’s veto demonstrates that he and the General Assembly have not been able to agree on how best to achieve that goal.
The bill passed in both chambers by big margins –– 52 to 11 in the House and 34 to 1 in the Senate –– large enough to override a veto. (A 60-percent majority vote is required for a veto override.)
But House and Senate leaders said they had not decided whether they will return for an override vote, according to their spokesmen.
The bill would have required National Grid to enter into “commercially reasonable” long-term contracts to purchase electricity from renewable-energy developers. That requirement would give assurance to prospective developers that there would be a buyer for the electricity produced by the project.
“It is with much regret that I find it necessary to veto this legislation,” the governor said in a statement yesterday. “Unfortunately, I believe the legislation before me today fails to balance our desire to invest in renewable energy with the realities that ratepayers currently endure.”
The governor gave three reasons for his veto. He said he took issue with a provision in the bill that would give National Grid a bonus payment of 3 percent of the renewable-energy contracts it entered into, once the project began operations. Electricity customers would have paid for the bonus.
National Grid has said that if it enters into long-term renewable-energy contracts, the cost to borrow money throughout the company would have been higher. The payment would have offset those additional costs.
According to calculations by The Providence Journal, National Grid would receive at least $2.8 million a year if it could purchase the required amount of power at a rate of 11.5 cents per kilowatt hour. (That is the rate National Grid is seeking to charge for electricity as of July 1.)
But the governor, echoing arguments made by some House legislators, said that any bonus to enter into long-term contracts was “unnecessary and unearned.”
Secondly, the governor said another flaw in the bill was that it did not require National Grid to enter into renewable-energy contracts with developers who are building a project in Rhode Island. The bill required that the project provide some economic benefit to Rhode Island, but did not require that it be located here.
While it may be true that a renewable-energy project in Massachusetts, Maine or Canada could provide some economic benefit to Rhode Island, the governor said that projects based here “deserve greater weight.”
Lastly, the governor said that “perhaps the most troubling provision” was a requirement that 5 megawatts of the renewable-energy contracts must come from a Rhode Island-based solar-energy project.
“While it’s encouraging to see a Rhode Island project get priority, it’s unfortunate that the General Assembly picked perhaps the costliest renewable technology and decided to give it, and only it, preferential treatment,” the governor said.
He said that a recent study by the University of Rhode Island Partnership for Energy found that the state is not well-positioned for large-scale solar power.
“I’m confident that working with legislative leaders, environmentalists, energy producers and ratepayers, we can come up with a better way to support investment in renewable-energy projects in Rhode Island,” Carcieri said.
The governor’s veto came as a surprise to some supporters of the bill. In fact, the governor’s chief energy adviser, Andrew Dzykewicz, indicated he was in favor of the bill at a May 20 hearing in the Senate Corporations Committee, according to a speaker sign-up sheet for the hearing obtained by The Journal.
Matt Auten, an advocate for Environment Rhode Island, a nonprofit environmental group, said that at the hearing, Dzykewicz expressed some concerns about the legislation, but also indicated overall support for it.
“We were on the verge of really moving forward,” Auten said. “This veto puts us in reverse in actually building renewable projects.”
He added that the veto sends a message to potential project developers “that we’re not serious about moving forward on projects.”
One of those developers, Allco Renewable Energy, concurred.
“This is just incredibly shortsighted,” said Bill Fischer, a spokesman for the New York-based company that has proposed building a solar-energy farm in Coventry and was among the seven companies that submitted bids to build an offshore wind farm.
“For the past three years, nothing has happened on [Governor Carcieri’s] watch. This assures nothing will happen on his watch.”
“It’s really a missed economic opportunity for the state,” said Jerry Elmer, staff lawyer for the Conservation Law Foundation. According to his calculations, the 3-percent payment to National Grid amounted to only 13 cents a month on a typical customer’s electric bill.
Some of the strongest criticism of the veto came from Montalbano.
The Senate president suggested that Governor Carcieri’s approach to developing renewable energy –– seeking developers’ proposals to build a billion-dollar wind farm off Block Island –– had too many uncertainties.
“We’ll believe the outcome when we see it,” Montalbano said. “We [the General Assembly] have chosen a path that we believe will deliver concrete results in a measurable time frame.”
By Timothy C. Barmann
Journal Staff Writer
28 June 2008
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