June 16, 2014
Rhode Island

Transmission cable: Who pays what

By Lily O'Gara | The Block Island Times | Jun 15, 2014 | block-island.villagesoup.com

As the Block Island Wind Farm project nears its final permitting phase, at least one island group has its eye on how the cost of a critical piece of the project – the transmission cable – will be paid for.

The Electric Utilities Task Force (EUTG), at a recent meeting, discussed the allocation of costs between National Grid (ratepayers) and BIPCo (Block Island Power Company) customers.

EUTG Chair Barbara MacMullan and other members of the EUTG said they were aware that while state law may be in place to ensure a reasonable split between the two groups, federal law could intervene. The Federal Energy Regulatory Commission (FERC), an independent government agency, has the final say as to how much each party will pay. Because of this, MacMullan said that EUTG members wanted “to keep an eye on” the process. They hope that by doing so the legislative formula will be adhered to.

The formula is designed to mitigate an undue cost burden to a place as small as Block Island. The island’s 1,670 island ratepayers cannot be expected to cover the cost of a $70 million cable, even if that cable is primarily installed for island residents.

The reality, too, is that National Grid’s 482,578 mainland customers will utilize most of the power supplied by the cable. The mainland’s peak energy load is more than 330 times the island’s peak (1,562.1 vs. 4.7). This means that the island will ultimately utilize less than 1 percent of the power generated by the turbines.

Due to these factors, islanders will be paying for approximately 1.5 percent of the cable costs. However, because there are fewer Block Island residents, islanders will end up paying more per year for the cable charge. Assuming that the cable costs about $7 million per year, Block Island customers can expect to pay $26.14 per year (about $2.18/month). Mainland customers will pay $14.41 per year (roughly $1.20/month).

These figures apply only if the Federal Energy Regulatory Commission chooses to uphold the proposed formula.

“The best we have is that National Grid will present it that way to the Public Utilities Commission when the rate case is finally heard,” Town Manager Nancy Dodge said at that recent EUTG meeting.

“FERC is not bound by anything,” member Everett Shorey said. “It [the payment split] could be anything.”

Although Shorey said it will likely go through, he added that the island did not “want to go 70/30 on the cable.”

Member John Spier said that the “talk about how much the ratepayers are going to pay on the mainland is where the next shoe is going to drop.”

MacMullan replied that the group was going to have to “keep sharp eyes on that.”

MacMullan also said that another challenge was going to be deciding whether the town would purchase electricity in bulk from National Grid, or if islanders would buy power on an individual or household basis.