WARWICK – Continuing its fight against a long-term contract for the sale of power from an offshore wind farm proposed near Block Island, Toray Plastics has filed a complaint with state regulators claiming the agreement between National Grid and Deepwater Wind has expired.
It is the latest attempt by the plastics company to overturn the 20-year deal following an unsuccessful appeal to the Rhode Island Supreme Court.
Toray opposes the contract due to the high price that National Grid would pay for power generated by the five-turbine demonstration project that Deepwater would build about three miles southeast of Block Island. In the first year of the contract, the price would be more than three times the price for power from natural-gas-fired plants and other conventional sources. The above-market costs would be passed on to all electric customers in Rhode Island, including Toray, which operates a factory in North Kingstown that is the single largest user of power in the state.
Toray’s new argument, filed with the state Public Utilities Commission on Monday, centers on a sunset clause in the power-purchase agreement. Under the clause, the deal would have automatically expired if all regulatory approvals were not obtained by this past June 30, one year after it was signed. The appeal of the contract filed with the state Supreme Court by Toray and another plastics company, Polytop Corp., was not resolved until July 1, when the court ruled in favor of Deepwater and National Grid.
The unfavorable outcome of that appeal for Toray is irrelevant to the company’s current position, according to its lawyer, Michael McElroy. By the time the court issued its ruling, the contract had already expired, he said. And strictly speaking, he added, the Supreme Court’s 10-day rehearing period on the case didn’t end until July 11, well after the June 30 termination of the contract.
“Whether it was July 1 or July 11, this is an on or off switch,” he said in an interview. “The contract is either terminated or it isn’t.”
But National Grid and Deepwater maintain that the issue is not so black and white. The contract allows the two sides to waive certain clauses by mutual agreement and with the approval of the PUC. On Sept. 29, National Grid filed a motion to waive the sunset clause.
“At the time the [power-purchase agreement] was executed, the one-year period was thought to be an adequate period of time for the Commission to approve the PPA and for any appeals to be resolved,” Jennifer Brooks Hutchinson, National Grid senior legal counsel, wrote in the filing. “Such time limits are customary in agreements, such as the PPA, in order to protect the parties from being bound to a contract for an indefinite period of time. It has always been the parties’ intent to proceed under the PPA.”
David Graves, a spokesman for National Grid, called the issue “an administrative matter.”
“Since the Supreme Court ruling on the contract was received on July 1, the parties executed the waiver and presented it to the PUC for approval in order to assure that the project can be financed without any contractual or other legal questions pending that could delay or disrupt the financing,” he said in a statement.
But McElroy said that because the waiver provision is part of the expired contract, it was also terminated as of June 30. National Grid and Deepwater cannot go back after the fact and use the provision to extend the contract, he argued.
“By their own admission, as things stand right now, there is no PPA in effect,” McElroy wrote in an e-mail to Cynthia G. Wilson-Frias, senior legal counsel to the PUC.
After consulting PUC Chairman Elia Germani, Wilson-Frias set out a 10-day period for Toray or other parties to formally object to National Grid’s motion to exercise the waiver provision. The deadline is Oct. 11. National Grid and Deepwater will have until Oct. 17 to respond. Both National Grid and Toray have requested a public meeting to argue their positions. No date has been set.
Deepwater chief administrative officer Jeffrey Grybowski expressed confidence that the agreement is still in effect and called Toray’s efforts nothing more than “stonewalling.”
“Toray’s latest gambit to delay this important and groundbreaking clean-energy project is nothing but sour grapes,” he said in a statement.
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