March 14, 2013
Rhode Island

Recommended fee waiver denial the latest in wind saga

By Derek Gomes, Staff Writer | March 14, 2013 |

NARRAGANSETT – A day after Deepwater Wind’s public hearing at Town Hall, a state Coastal Resources Management Council subcommittee denied the company’s request for a $700,000 fee waiver on a 4-1 vote.

Deepwater could not prove payment of the fee would result in economic hardship for the company, the subcommittee decided. The full CRMC must now vote on the matter, but no date has been set.

Deepwater is developing a 30-megawatt demonstration-scale wind farm off Block Island, which will meet the energy needs of the island. The company proposes connecting the island to the mainland grid to make use of excess energy. In the first year of the wind farm’s operation, National Grid would purchase the excess energy at a cost of 24.4 cents per kilowatt-hour. Costs would increase by 3.5 percent each subsequent year of the wind farm’s 20 years of operation. The wind farm would be decommissioned after 20 years.

At the public hearing in Narragansett on March 5, Deepwater CEO Jeffrey Grybowski said mainland ratepayers would see a $1.30 increase on their monthly electric bills during the first year of operation. Grybowski said the project would create jobs and make Rhode Island a leader in clean, renewable energy. The demonstration-scale wind farm would create 200 temporary construction jobs, based at the Quonset Business Park in North Kingstown and on the Gulf Coast. Once the wind farm is operational, there would be six full-time positions to maintain the turbines, he said.

After the Block Island farm is running, Deepwater plans a 150-200 turbine offshore regional energy center that would supply energy to Long Island, Rhode Island, Massachusetts and Connecticut. This project would create 600 to 800 jobs, according to the Quonset Business Park website. Deepwater has had an option to lease 117 acres of property at Quonset since 2009.

Deepwater has been trying to develop the wind farm for years. In March 2010, after National Grid agreed to purchase the energy, the R.I. Public Utilities Commission rejected the agreement unanimously because it was not “commercially reasonable.”

In the wake of the denial, the General Assembly passed amended laws to authorize National Grid and Deepwater to enter into a new purchase agreement. This agreement set a provision that if Deepwater’s “total facility costs” are less than “a current projection of $205,403,512,” the savings would be used to reduce National Grid’s cost to purchase the electricity. But recent projections put construction costs at $250 million.

The amendments also changed the definition of “commercially reasonable.”

In its second – favorable – ruling, the PUC said, “[T]he General Assembly has instructed this Commission to accept the high cost of offshore wind technology for a project with limited economies of scale, so long as the slated costs, and [the power purchase agreement] pricing, terms and conditions, duly reflect those costs.”

The PUC approved the agreement between Deepwater and National Grid with a 2-1 vote in August 2010.

But Deepwater faces another hurdle from Narragansett, which must approve a transmission line landing at the Pier that will run along poles through the heart of town. Narragansett would be compensated for the line, but a financial agreement has not been reached.

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