October 6, 2013
Opinions, Rhode Island

Rhode Island is being had by Deepwater Wind

James O’Neil and Laurence W. Ehrhardt: R.I. is being had by Deepwater Wind | James O’Neil and Laurence W. Ehrhardt | Providence Journal | October 06, 2013 | www.providencejournal.com

A group of Massachusetts utilities has just contracted for a substantial supply of clean energy from wind turbine projects in Maine and New Hampshire at an average price of less than 8 cents per kilowatt hour.

That’s less than one-quarter of the price Rhode Island customers will be paying for electricity from the controversial Deepwater Block Island wind turbine project.

Connecticut’s governor has announced a similarly priced deal for customers in his state and National Grid has just submitted an application to purchase Maine wind power for Rhode Island at a fixed price of 7.8 cents per KWH. Where does that leave Rhode Island’s Block Island project? Out of sight!

The contract the General Assembly and governor forced National Grid to enter into with Deepwater Wind averages 34.5 cents per KWH and will cost $696 million over 20 years. (This doesn’t include the transmission cable, now projected to cost another $60 million, that the state is seeking to bury under Scarborough Beach after the Narragansett Town Council said it didn’t want it anywhere on town land.)

If we could get the same pricing that our sister states will enjoy, the cost for the same amount of clean, renewable energy would be only $161 million, a savings of $535 million, or 77 percent!

To add insult to injury, the parties to the Massachusetts deal include National Grid and First Wind, a Deepwater affilliate whose chief executive also serves as chairman of Deepwater – the same people who are paying and collecting the much higher price in Rhode Island.

The bad publicity the state receives for its foolhardy investment in 38 Studios pales in comparison with being seen as willing to pay four times more than our neighbors are for renewable energy. What will it take to convince Rhode Island’s leaders that we are being had? How much longer will they stand by idly while we are being taken to the cleaners?

Some would like to claim that you can’t compare the two sources of electricity, since the Massachusetts power comes from land-based turbines while the more expensive Deepwater electricity will come from offshore turbines.

Baloney! Electricity is electricity. Your light bulbs can’t tell the difference. Customers of Rhode Island manufacturers won’t be able to tell the difference, except for the cost, between products made with electricity from one source or the other. You won’t be able to tell the difference except when you get your monthly bill.

Another group wants to claim the state will enjoy great economic benefits from a developing offshore industry – pure conjecture at this point. In its original submission to the Public Utilities Commission, Deepwater stated that the Block Island project would result in 35 to 50 temporary jobs and only six full-time jobs. Before being overridden by the politicians, the Public Utilities Commission rejected the project as commercially unreasonable, saying they could find no evidence the high costs were worth the price.

Later on, the Economic Development Corporation’s economic expert could only come up with an estimated economic benefit of the Block Island project of $129 million, which compares miserably against what is now demonstrated as a $535 million overpayment for the output.

But “wait,” they say, “it is shortsighted to measure the ‘benefit’ from only the Block Island project, since it may serve as a stepping stone to much bigger projects in the future.”

But will it? There is no guarantee such projects will come to fruition. Both the Massachusetts and Connecticut announcements decrease their likelihood.

Even though Deepwater recently won the development rights for a much bigger project offshore, nothing will happen until it can contract for the sale of the electricity produced.

Deepwater’s chief executive recently told us that the big project would require a price of 13 to 14 cents per KWH plus annual escalation of 3 percent, or an average of 18 cents per KWH. That’s more than double the cost that the Massachusetts and Connecticut utilities were just able to negotiate. It’s also more than double the price at which the Canadians are allegedly prepared to supply vast amounts of hydroelectric power, also defined by the federal government as “clean energy.”

Who, in his or her right mind, would want to purchase power from Deepwater’s big project when he or she has alternatives at half the price?

When the Rhode Island Supreme Court ruled that our legislature had required consideration of only the “benefits” and not the costs of the Block Island project, it wrote: “this Court recognizes the parade of irrational possibilities that could incur from this legislative direction.”

We are now facing those irrational possibilities to the economic detriment of our citizens. That $535 million is a lot of money – more than the Sakonnet Bridge toll would collect over the same period, and many times more than the expected loss from 38 Studios.

Unlike the 38 Studios debacle, however, there is still time to do something about it.

James O’Neil lives in Narragansett and served as Rhode Island’s attorney general from 1987 to 1993. Laurence W. Ehrhardt lives in North Kingstown and was a member of the General Assembly from 2005 to 2012.