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Green energy, high prices, and political manipulation

Three years ago, a winner was chosen to make Rhode Island the nation’s first state with an offshore wind farm.

Republican Gov. Donald Carcieri made the announcement: Deepwater Wind Inc., – a well-capitalized New Jersey wind power development company with hotshot lobbyists – won the contract.

Carcieri unveiled the $1.3 billion, 800-job venture in language fit for a legacy: “This is much more than an energy project. This is about creating a new industry in Rhode Island; an industry that puts Rhode Island at the epicenter of the emerging alternative energy market.”

And it would all come from private investment sources, said his news release.

Not everyone was so delighted. Residents of Block Island, the Rhode Island Sound site chosen for Deepwater’s windmill factory, wondered how they’d supply water, streets, sewers, schools and homes for the 800 new families that would come with the jobs.

Then the regional electric utility company, National Grid, got a nasty shock when the state General Assembly passed a law forcing them to buy an unexpectedly high 150 megawatts of electricity from the Deepwater Wind project in a 20-year power purchase agreement.

Being forced by law to buy “RES” (renewable energy sources) had become a way of life in the utility world, but it wasn’t just the quantity. National Grid mutinied when Deepwater Wind told them the new price: 25.3 cents per kilowatt-hour, compared with the 9.2 cents they were paying for conventional electricity ?– so they rejected the proposal outright.

The two wrangled for nearly a year, and finally finagled a contract that passed the higher costs on to consumers, but the state’s Public Utilities Commission rejected it, saying the price of electricity was too high.

Then things got weird. Carcieri hastily moved to protect his legacy and convinced the Rhode Island General Assembly to pass a law mandating that the PUC reconsider its rejection. Hangdog, the PUC approved the pricey National Grid/Deepwater Wind deal.

The new law and the PUC approval stunned everybody, but it infuriated Rhode Island Attorney General Patrick Lynch. He stormed into the state supreme court to get that PUC approval thrown out, arguing that the revised law violated the Rhode Island Constitution by favoring one company.

“I’m all for green energy,” Lynch told reporters, “but in this case, green energy translates into greenbacks for the developers of an anti-competitive project that will force us to buy overpriced electricity for the next 20 years to subsidize one company.” He wanted Deepwater Wind stopped.

The Conservation Law Foundation joined Lynch’s appeal, arguing that the legislature overstepped its bounds by causing the PUC to unconstitutionally rule on a case it had already decided.

Then two local plastics companies jumped into the appeal, Toray Plastics and PolyTop, arguing that the PUC’s approval didn’t meet the “commercially reasonable” test required by Rhode Island law and would ruin their industry.

After threatening to locate a new plant in Virginia, Toray will stay in Rhode Island, defraying energy costs with new solar panels on its acreage, paid for by grants and loans from the state’s Economic Development Corporation, and state and federal grants from the Federal American Recovery and Reinvestment Act.

About three months ago, the Rhode Island Supreme Court ruled in favor of the PUC approval, meaning the Deepwater Wind operation can legally proceed.

Odd thing, though: The state supreme court allowed Justice Maureen McKenna Goldberg to hear the case despite the fact that her husband, Robert Goldberg, had been a lobbyist for Deepwater Wind, while the General Assembly was developing legislation that required utilities to sign long-term renewable energy contracts.

Can you spell conflict of interest?

Examiner Columnist Ron Arnold is executive vice president of the Center for the Defense of Free Enterprise.