August 31, 2012
Rhode Island

Deepwater deal faces federal complaint

By Stephanie Turaj | The Block Island Times | block-island.villagesoup.com 31 August 2012

A Newport resident filed a complaint with a federal agency last week charging that electricity generated at a wind farm off Block Island’s southern coast would be too expensive, a burden that would unfairly fall on mainland ratepayers.

The agreement that would allow Deepwater Wind to sell its power to National Grid also violates federal laws by giving one company exclusive rights to develop wind farms in state waters, says the complaint by Ben Riggs.

“The result is a project that will charge rates that are nearly double that of Cape Wind, and will double again over 20 years,” said Riggs.

Jeff Grybowski, Chief Administrative Officer of Deepwater Wind, called Riggs’ complaint frivolous. “He has long been a project opponent,” Grybowski said. “Based on his complaint, he seems to oppose any energy source that does not pollute our air by burning fossil fuels. We are very confident that the Federal Energy Regulatory Commission will reject his complaint. In fact, it appears that he filed at least one previous complaint with FERC on an unrelated energy issue that was rejected. We are moving full steam ahead on both our wind farm and transmission projects for Block Island.”

The $204 million, five-turbine Deepwater Wind project would generate up to 30 megawatts, more than Block Island could use. Excess power is to be sold to National Grid and transferred to the mainland on a 15-mile cable that will be laid under the ocean floor. It’s the first of two projects the company plans in the region; the second, much larger project would lie further offshore in federal waters.

The Block Island project just passed a federal regulatory hurdle for its cable and is about to start the state permitting process. It’s the first offshore wind project planned in Rhode Island and a contender to be the first in the country if construction starts next year, as the company has said it plans.

The project would reduce Block Island energy costs, which are currently almost eight times those in the rest of Rhode Island. But at a starting price of 24.4 cents per kilowatt hour and annual increases of 3.5 percent, its power would start off almost three times more expensive than the conventional sources where National Grid buys most of its power. The net effect would be a roughly 2 percent increase for mainland ratepayers as soon as the wind farm goes online, with more increases to follow.

“In the case of Block Island, it would certainly be nice to be able to improve the cost and reliability of electric power there,” writes Riggs in a comment letter, but he adds, “more than 99% of the cost would unfairly fall on non-Block Islanders. For those of us who don’t enjoy having a home there, this is objectionable.”

Another wind project could have cost less, claims Riggs in the complaint, which was filed August 22 with the Federal Energy Regulatory Commission and targets the state Public Utilities Commission decision that allowed the deal between Deepwater and National Grid to be struck. Cape Wind’s much larger offshore wind project off the coast of Cape Cod was contracted for a starting rate of 18.7 cents per kWh.

The power agreement violates the Commerce Clause of the U.S. Constitution and two federal laws, the Federal Power Act and the Public Utility Regulatory Power Act, says Riggs. He also charges that, by giving Deepwater exclusive rights to develop offshore wind farms in state waters, the agreement limits interstate trade by nixing out-of-state competitors for the 20 year life of the agreement.

Riggs also calls into question the public benefit of the project and the efficiency of offshore wind energy overall.

It’s not the first time the power purchase agreement for the Block Island project has faced challenges.

The PUC first rejected the idea in March 2010 as being “not commercially reasonable,” but after wind farm supporters in the General Assembly and in former Gov. Don Carcieri’s office worked to amend the long-term contracting law that governed the decision, the PUC voted 2 to 1 that August to approve the deal.

Two manufacturing companies then challenged the deal in state Supreme Court. Rhode Island-based Toray Plastics and Polytop Corp. appealed it in April 2011, objecting to the rise in electricity costs and saying that the state should have considered the roughly $50 million cost of the transmission cable when deciding whether the project made financial sense. While the court ultimately upheld the PUC’s decision, Riggs’ complaint said that it did not consider the Commerce Clause and several other grounds.

This is part of the reason the power purchase agreement, the complaint says, was neither commercially “just or reasonable” nor “in the public interest.” Mainland ratepayers would be on the hook for more than $500 million in excess cost, says Riggs.

Furthermore, Riggs argues in the complaint that renewable energy such as the wind turbines and solar panels contemplated here do not serve a public interest, and create a significant economic hardship for all levels of residential, commercial, and manufacturing sectors.

“Wind power isn’t ‘green,’” said Riggs. “Its effect on power grids has been shown to actually result in higher fossil fuel use and carbon emissions. This project will contribute nothing to our energy needs or the environment.

It’s business as usual for the state’s leadership, he says. “This misguided project is one more example of how the leadership in the General Assembly continues to be run by special interest groups,” said Riggs. “In this case, they not only tried to saddle Rhode Islanders with over a half billion dollars in added electric costs, but they broke federal law in the process.”