The stand-alone cable quandary 

Deepwater Wind’s plan to build a wind farm within three miles of Block Island has created a divide among island residents in the past year. Don’t look for reconciliation between the various factions any time soon.

After having gone before the state Public Utilities Commission twice – rejected unanimously the first time, then approved 2-1 the second time – the Deepwater wind project is currently before the state Supreme Court, which is expected to render a decision on the legality of the PUC approval this spring.

Critics of the wind farm maintain that Block Island could meet its desperate need for reasonably priced electricity without resorting to an expensive wind installation that they say would be an eyesore. Instead they contend that it is possible to convince the state government to install a stand-alone underwater cable to the island that would deliver electricity from the mainland to the island.

The wind farm critics charge that a stand-alone cable has never received the consideration it deserves.

“People got on board [with the wind farm] and there was no looking back, and I don’t think we had an opportunity to understand the facts on both side,” resident Patricia Doyle said. “I’m all for green energy, but I got involved because the process was not being respected.”

Those on the other side argue that the wind farm is the only realistic route for the island to secure a cable with the help of state ratepayers, because the island ratepayers alone could not afford the cost.

The Town Council and the Electric Utility Task Group maintain that it would be impossible to convince the state to subsidize a cable’s construction without having some “green energy” element involved in the proposal.

“Anyone who thinks that we will get a cable without a wind farm, must be smoking something,” Cliff McGinnes Sr., Chief Operating Officer of Block Island Power Company, said at a meeting of the EUTG in September.

McGinnes and others claim that a cable option has been examined many times in the past, citing various grant and loan applications to the U.S. Department of Agriculture and cost analyses conducted during the last 10 to 15 years. These studies predicted a cable would cost north of $20 million

“It is incorrect to say [a cable] has not been considered,” said Barbara MacMullan, a member of the task group. “It is misguided to say we should pursue a cable option, because it’s like saying there’s a build-a-bridge option. It doesn’t exist.”

MacMullan also notes that the town considered many alternatives to the wind farm, including various combinations of a cable, diesel, and wind before determining that the cable was cost prohibitive.

That argument doesn’t fly with wind farm opponents.

The cable boosters have myriad reasons for being skeptical of the wind farm. They charge that the process has been upended because of cronyism and money, and believe that a wind farm will damage the island’s scenic beauty. They also question if the project will actually reduce the island’s energy cost and produce a viable alternative to burning fossil fuels.

“Everyone has gotten so caught up in the ‘green is good’ idea that they don’t stop to think about the economics and the physics and the evidence. We’re financing this with debt, which put the U.S. economy in the tank, and all the empirical evidence is against this producing enough energy to get us off fossil fuels,” said Michael Delia, who owns a home near the Southeast Lighthouse.

Delia and his fellow critics question the Town Council’s repeated claims that there is no money – state and federal grants or subsidies – available to build a stand-alone cable.

The stand-alone proponents also point out that the small wind farm would cost mainland ratepayers nearly a half-billion dollars in above-market costs during the course of 20 years for only one-tenth of one percent of its electricity demand. Why ask the state’s ratepayers to subsidize that amount, versus just $40- to $50 million for a cable alone?

“This comes down to mainland people paying $400 million over 20 years for the farm, which doesn’t make any kind of sense. The crazy thing when it comes to the cable cost, is that we’re being told most often that it’s too expensive by Bryan Wilson, who is a Deepwater employee,” said Rosemarie Ives, who owns a home on Mohegan Trail.

Wind farm supporters point out that while electricity costs for mainland residents would rise with the wind farm, it would be a relatively painless bump of a few dollars a month. Also, the amended legislation that led to the PUC’s wind farm approval laid out the island ratepayers’ allocation – approximately $2 a month if the cable comes in at $42 million. Mainland ratepayers would shoulder 95 percent of the cable’s cost.

For wind farm supporters, rejecting the project would doom Block Island to ever escalating electricity rates tied to the cost of oil. They say the island could be casting aside the only lifeline it’s ever going to get from the state. After all, they argue, the entire reason for the small Deepwater farm was to solve the Block Island energy situation.

EUTG member Everett Shorey said at past meetings that a stand-alone cable could be shouldered by island ratepayers alone only if it cost less than $15 million. According to Shorey, once the cable price exceeds $15 million, it would not reduce the island’s electricity rates unless it were subsidized with grants or paid for with the help of mainland ratepayers.

“People have money for what they want to have money for,” said Delia. “People on the island are living with the notion that we can’t afford it without help, but many at the state level were unaware that we needed it, until the PUC opened a docket looking into getting a cable for the island.”

Dangling a cable?

The stand-alone proponents perhaps had good reason to think the state would come to the island’s rescue with a cable. Indeed, in the immediate wake of the PUC’s initial rejection of the wind farm contract in March, Commissioner Paul Roberti spoke at length about how the wind farm was a well-intentioned but ultimately flawed solution for the island’s electricity woes. He also said the process made clear that “Block Island has a problem, and we have to solve that problem.”

In the written decision, the PUC said, “After hearing this evidence on the unique issues facing Block island, the Commission will initiate an investigation into distribution service quality of BIPCo and into the construction of a transmission line between Block Island and the mainland to serve the Block Island electric load by Grid.”

In fact, even before that decision, National Grid had suggested a stand-alone to the PUC while rejecting an initial Deepwater contract. In an October 2009 letter submitted to the PUC, National Grid suggests a cable could be decoupled from the wind farm:

“It is important to point out that the cable project, standing alone, is a small component of the cost of the project. As such, the benefits of the cable connection could be achieved by simply having National Grid construct and own the cable, without any renewable generation project.”

But, as the PUC ultimately approved the wind farm, its interest in exploring a stand-alone cable has waned. Were it to ever go down that road, PUC spokesman Tom Kogut said the commission would examine the cost structure and engineering associated with cables not only of summer retreats such as Nantucket and Martha’s Vineyard, but also various islands off the coast of Maine.

“At this juncture, it’s hard to say how much a cable would cost. We’re not even at the point of knowing who the players would be. We would need to schedule a technical session and map out a rough procedural schedule,” said Kogut.

And for its part, National Grid has turned the page on a stand-alone cable following the PUC’s change of heart.

“We are not considering a stand-alone cable because we now have approval from the PUC to move forward with the Power Purchase Agreement, which contains provisions for the cable between Block Island and the mainland,” said National Grid spokesman David Graves.

Deepwater Chief Operating Officer Paul Rich recently told the Town Council that the transmission cable could be installed by the third quarter of 2012 at the earliest, depending on the Supreme Court decision.

Even if the wind farm approval were overturned and a funding mechanism for a stand-alone cable was agreed to, it would appear the timeline would still be several years away.

High income hurdle?

The wind farm’s boosters say that previous attempts to get help for a cable were unsuccessful in large part because the high incomes of summer residents meant that New Shoreham did not meet the standard to be considered a distressed community. With Block Island already laboring under some of the highest energy costs in the nation, the Deepwater proposal is too attractive to pass up, they claim.

As far as socialization of the cost of the wind farms, some cable proponents believe that a case can and must be made regarding the installation of a cable. Cooneymus Road resident David Lewis, for one, argues that Block Island’s economic contribution to the state in sales taxes and tourism business should factor into a decision to subsidize a cable. Lewis says that in 2007 Block Island generated $259 million of tourism-related expenditures in the state, and that the 7 percent sales tax alone returned $18 million in sales tax revenue that same year.

“An economic case can be made that lower electricity rates for Block Island’s tourist economy are important to the state of Rhode Island, and that socializing the cost can be justified when the appropriate economic impact analysis is done, including the sales tax returned to the state from the island tourist economy, hotel taxes retained by the state, personal income and corporate taxes paid to the state, and the statewide multiplier effect of wages paid to industry employees stemming directly from Block Island tourism,” Lewis said at the July PUC hearing.

Though Lewis may be correct about the healthy contribution Block Island’s tourism dollars make to the state economy, wind farm supporters say that argument will fall on deaf ears.

“There is no way to get the costs socialized unless it is a benefit to the mainland, and just having Block Island is not enough of a benefit,” MacMullan said.

But that tourism income is very much in danger if a wind farm is constructed and encroaches upon the island’s natural beauty, argue Lewis and Michael Hickey.

“Now, no one is going to irrefutably prove tourism will increase or decrease with this wind farm. My own feeling is that the wind farm would give a short term bump up in tourism, due to the curiosity factor, but a long term negative,” Hickey said at the July PUC hearing.

MacMullan counters that the high cost of electricity and not the wind farm is the true threat to Block Island’s economic viability. The costly electricity leads to island business people being forced to raise prices on food and lodging.

“If costs get higher and higher people will just go to Newport and Narragansett. There are substitutes for Block Island,” MacMullan said.

In the lead-up to this week’s elections, there was a fairly clear schism among the candidates. Incumbent Kim Gaffett was the most outspoken in her support of the wind farm, not just because it would bring a cable, but because it could make New Shoreham the only town in the nation powered entirely by renewable energy. Her opponent, Terry Mooney, was adamantly against the farm and swore to pursue a stand-alone cable with the island’s congressional delegations in Providence and Washington D.C. A close vote illustrated the island’s divided views on this issue; however, Gaffett edged out Mooney by 35 votes or 52.2 percent to 47.8 percent.

Second Warden Ray Torrey lent his support of the farm, while his opponent Les Slate leaned toward the cable. Torrey won his bid for re-election 61.3 percent over Slate’s 38.7 percent. Of the at large candidates, only incumbent Peter Baute remained a steadfast supporter of the farm, though he acknowledged that a cable was a primary need. Baute edged out Deepwater detractor Sean McGarry by only two votes. Victorious incumbent Dick Martin has said that he would support any route that would result in a cable. Amelia Verna Littlefield, who was defeated Tuesday, supported the cable without the wind farm. Incumbent Ken Lacoste, who was also reelected, was once a supporter of the wind farm, then a detractor in the wake of the PUC’s approval. He urged the town to adopt a “can-do” attitude on a stand-alone cable at the first Candidates Forum. The four other candidates who committed solely to a stand-alone cable were not successful in their Town Council bids.

Recent efforts to gain a cable:

1993: BIPCo explores options for a cable “at the direction of regulators”

1994: BIPCo asks the PUC for $100,000 to study for financing options. PUC rejects the request saying taxpayers should not bear the cost.

1996: EPA orders BIPCo to either install the cable or replace generators. PUC permits cable based on an estimated cost of $10 million.

1997: BIPCo abandons the cable in favor of diesels that meet clean air requirements.

1998: With the help of U.S. Senator John Chafee, Department of Energy funds a study by NREC, Renewable Energy Efficiency Options for BIPCo; recommended a combination of solar, wind, conservation and diesels.

September 2007: A report conducted by consultant HDR (“Block Island Power Company Electric resource Planning Study) – a collaboration with the Town of New Shoreham, BIPCo and the PUC – concludes that at a cost of $18 million cable is less economically feasible than continued reliance on diesel or diesel and wind.

October 2007: BIPCo applies for a USDA grant to help fund a cable using the same $18 million figure and adding the cost of a fiber optic cable. Application states that without grant funding, a cable to the mainland is not economically viable. It is turned down.

— Courtesy of Barbara MacMullan of the Electric Utility Task Group