I am a long time private equity investor and co-manage a firm with over $1 billion in equity capital. On behalf of my partners, I invest in most industries in the United States in early and late stage operations. It is my opinion that our community on Block Island is being inappropriately leveraged by a thinly-capitalized and nascent power developer because we are not yet connected to the mainland power grid.
The Joint Development Agreement between the State of Rhode Island and Deepwater Wind signed in January 2009 specifically states that the purposes and objectives of the Ocean Special Area Management Plan is to “foster a well-informed and committed public constituency”. It has been my mission now for three years to be well-informed and to be a vocal constituency of the public in order to ensure information made available to the public was analyzed and communicated to decision-makers and interested parties. On behalf of the residents of Block Island, you represent a few of those decision-makers.
Please be aware that Deepwater Wind and its capital providers stand to make over $127 million in profits from the power sold to National Grid under the pending Power Purchase Agreement. That represents fully 30 percent of every dollar paid for every megawatt of power to be generated by the proposed windfarm. These $127 million in profits is after taking into account (i) cost recovery for building the windfarm, (ii) operating and maintenance expenses, (iii) cash taxes, (iv) decommissioning costs, and (v) costs of the cable (which will be paid for or reimbursed by parties other than Deepwater). All for creating just six permanent jobs. $127 million for just six jobs. If you want citations for these datapoints, I can direct you precisely to them in PUC Dockets 4111 and 4185.
You may ask: “What should Block Island get for allowing five massive structures to destroy the natural preservation fiber that has been a part of this community for 35 years?” As far as I can tell at this point, it will be just $300,000 for easement rights. That’s it. Deepwater gets $127 million in profits and Block Island gets $300,000. That cable you are now thinking about is going to be paid for by others (whether it comes with a windfarm or not).
A stand-alone cable can be financed through revenue bonds, special tax assessments and power surcharges. And, we will all still have reductions in power costs with green power from the mainland by opting into National Grid’s “GreenUp” program (look it up) where we can all buy power made from wind, solar, biomass and other renewable sources. We can both get a cable without a windfarm and buy renewable energy through it.
If, however, you must support the windfarm, I would recognize the position that the council sits in and require Deepwater to take $25 million of those profits they stand ready to hoard and force the upgrade of the island’s obsolete power infrastructure and bury every single power line on the island. That would be a preservation initiative to be proud of. You are uniquely positioned to do so.
This letter was sent to the Town Council and copied to the Times