February 27, 2011
Rhode Island

Portsmouth offered lower price for energy

By Alex Kuffner, Journal Staff Writer, The Providence Journal, www.projo.com 27 February 2011

WARWICK – National Grid is offering to pay Portsmouth a lower price for power from the wind turbine at its public high school but reminds the town that it will still generate additional revenue by selling renewable energy tax credits.

In a letter submitted to the state Division of Public Utilities and Carriers late Wednesday, the utility proposes paying a price equal to the average wholesale rate of power.

The new price would be a compromise – it would be less than the retail rate that Portsmouth is currently paid for power from the turbine but would be higher than some wholesale prices and, if the town agrees, would free it from possible federal oversight.

“The Company believes that this would be a fair and reasonable approach that would remove concerns about the facility’s compliance with applicable federal provisions and at the same time allow the Town of Portsmouth to benefit from its generating facility,” National Grid senior counsel Thomas R. Teehan writes.

Questions about whether Portsmouth was being paid the right price under state and federal laws for power from the wind turbine were raised by Benjamin Riggs, a Newport resident who doubts the financial viability of wind energy and forwarded his concerns to the division last year.

After the division looked into the matter, on Feb. 2, the staff issued a memorandum saying that the 1.5-megawatt turbine installed in 2009 should never have been allowed to qualify as a “net-metering” facility that could sell its electricity into the regional power grid at a retail rate. They recommended that Portsmouth be paid at a lower, wholesale rate.

Portsmouth has been paid as much as 11.4 cents per kilowatt-hour for power from the turbine. More recently, the price has been closer to 9.5 cents. The average wholesale rate paid by National Grid over the past two years has tracked several cents less than those retail prices.

The case before the division revolves around the state law that governs net metering – which functions as a financial incentive to owners of wind turbines and solar energy systems – and differing interpretations of that law.

Under a strict reading of the statute, only green energy that isn’t used on site can be sold to the power grid at a retail price. Not only does this prevent any excess electricity from going to waste, but the higher price rewards the owner of the turbine or photovoltaic array for generating clean, renewable power.

But there is also a looser interpretation of the law that allows renewable-energy systems to sell directly into the power grid. The Portsmouth turbine was installed directly into National Grid’s distribution system. None of the power is used on site at the high school. Instead, all of it is sold to National Grid.

The retail price that has been paid to Portsmouth includes surcharges for distribution and transmission, services that National Grid provides, not the town. If National Grid is paying that money to the town but still maintaining the services, then it must be getting compensation from other customers to make up the difference, Riggs has argued.

As referred to in National Grid’s latest offer, Portsmouth also makes money from the turbine by selling federal renewable energy credits, financial incentives that accrue with the production of clean energy. Under a 10-year agreement, Portsmouth sells the RECs at 4 cents per kilowatt hour to People’s Power and Light, whose customers voluntarily buy them to support green power.