Deepwater Wind’s initial project will raise state and local governments’ electric bills by a combined $1.5 million in its first year, according to documents reviewed by the Target 12 Investigators.
Municipal electric bills will increase by a total of $1 million while state government’s bill will rise by $476,630, according to an estimate commissioned by National Grid from Energy Security Analysis Inc. The cost would rise by 3.5 percent every year for the next two decades.
The estimate was included in a document National Grid asked the R.I. Public Utilities Commission to seal from the public view as the panel weighed whether to approve a controversial 20-year contract between Deepwater and Grid. The PUC denied that request, opening the town-by-town breakdown up for public inspection.
The government cost estimates reflect the smaller of Deepwater’s two projects, a demonstration wind farm off Block Island that will have up to eight turbines and is expected to be up and running by 2013.
The company – which was handpicked by Gov. Don Carcieri in 2008 to develop wind power off Rhode Island’s coast – is also proposing a much larger, utility-scale development of up to 200 turbines that won’t be in place until at least 2015.
Bigger towns get bigger bills
The increased annual electricity costs for communities would range from a high of $190,799 in Providence to only $1,098 in Foster. Cranston – which has an annual electric bill of more than $4 million – would see an increase of about $64,000, while Warwick’s bill would jump by about $71,000.
New Shoreham was not included because it currently generates its power using diesel fuel; the wind farm would most likely mean a decrease in Block Island’s electric bill.
Pawtucket Mayor Donald Grebien said his city, which would see its electric bill rise by $75,000 because of the Deepwater deal, is not in a position to take on the increased costs. Pawtucket’s deficit this year is estimated at more than $4 million.
Grebien said he wasn’t aware of the potential jump in his utility bill until Target 12 showed him the numbers. “Any increase is something you have to look at,” he said, adding that he supports alternative energy generally.
Paul Rich, Deepwater’s chief development officer, said he understood that local government budgets were under pressure right now, but argued his company’s project makes sense from a long-term perspective.
“The price impacts – while real and tangible to municipalities – is something that will hopefully be absorbed by those [governments] and allow for job creation and economic development,” Rich said.
“We shouldn’t forego environmental benefits just because of some tough times that we’re going through right now,” he added.
Judges to decide wind farm’s fate
All the costs cited in National Grid’s analysis are for the small Block Island project, which Deepwater CEO William Moore recently said he hopes will be operational in late 2012 or 2013.
The project is currently tied up in a legal challenge before the Rhode Island Supreme Court. Opponents argue that Carcieri and state lawmakers acted unconstitutionally when they passed a law forcing the PUC to reconsider its initial rejection of the Deepwater deal. The commission approved the agreement after that law passed.
Attorney General Peter Kilmartin recently dropped out of the suit, which was strongly backed by his predecessor Patrick Lynch, but three other parties are continuing the fight. The court has not yet scheduled oral arguments in the case but those may be held this spring, spokesman Craig Berke said.
In December, Deepwater also expanded the size of its larger project – which it’s calling the Deepwater Wind Energy Center – to a maximum of 200 turbines.
The blades will be located at least 13.8 miles from the shore, with most of them 20 to 25 miles away, the company said. Construction on the Energy Center project “is planned to begin in 2014, with the first wind turbines in operation by the end of 2015,” Deepwater said.
“This ‘second generation’ of offshore wind farms will be larger and farther from shore, and will produce lower-priced power, using more advanced technology than the offshore projects announced to date,” Moore said in a statement in December.
Though cost estimates for rate and taxpayers for the larger project have not been done, the wholesale price of power from Deepwater’s larger Rhode Island Sound project will be lower than the Block Island one, and those costs will be spread out across New England’s regional electricity grid, according to the company.
Power by the numbers
Another benefit cities and towns will receive from Deepwater’s long-term contract with National Grid is the ability to know how much it will cost over the next 20 years because it locks in future prices, Rich said.
“It’s for a set price,” he said. “It’s known. It’s predicted.”
Rich also pointed out that an exclusive WPRI 12 poll last fall showed 56 percent of likely voters in Rhode Island would be willing to pay an additional $1.35 to $3 a month for electricity generated from Deepwater’s Block Island project. Thirty-two percent were opposed and 12 percent unsure.
In 2009, New Englanders got 42 percent of their electricity by burning natural gas and another 30 from nuclear power, according to ISO New England, the organization that manages the region’s 8,000-mile power grid. The next-biggest sources were coal, 12 percent; hydropower, 6 percent; and other renewables, 6 percent.
Nearly 99 percent of the electricity generated within Rhode Island’s state lines comes from natural gas, and the total of about 1,800 megawatts was more than enough to cover in-state demand in 2009. Excess power is sold on the regional wholesale market.
Richs said the price of wind power is also likely to drop in the future thanks to innovations and economies of scale – but only if expensive early projects like the Block Island one get funded.
“Until we get an industry here and shorten the supply chain and truly get some economies of scale, it’s going to be more expensive than fossil fuel,” he said.
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