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Journal investigation: Favor to wind-project developer could cost electric rate payers  

Credit:  By Alex Kuffner, Journal Staff Writer | By Katherine Gregg, Journal State House Bureau | Providence Journal | Jun. 12, 2016 | www.providencejournal.com ~~

PROVIDENCE, R.I. – The budget bill headed for a House vote this week could reverse a decision made by state regulators and force Rhode Island electric ratepayers to pay extra to help a big campaign donor connect his wind projects to the power grid.

Critics say that language tucked in the spending plan that surfaced after midnight last Wednesday was inserted as a favor to a single company – North Kingstown-based Wind Energy Development, a business that is nearing completion of a 10-turbine wind farm in Coventry, is replacing the broken wind turbine at Portsmouth High School and has a plan to install a large turbine in North Smithfield.

The company is headed by Mark DePasquale, who has made more than $23,000 in campaign contributions over the past five years to state government leaders, including House Speaker Nicholas Mattiello, House Majority Leader John DeSimone and Governor Gina Raimondo.

June DePasquale, of the same home address, contributed another $12,200 to the governor and lawmakers, including the company’s Smith Hill champion: state Rep. John Carnevale, a retired Providence police sergeant.

Including DePasquale employee contributions over the last two years alone, the tally exceeds $64,000, according to campaign finance records.

The densely worded “renewable energy” portion of the budget bill does not name DePasquale or his company, which has had three registered lobbyists at the State House this year.

The critics point out that the provision takes effect retroactively – to Jan. 1, 2015 – meaning it could be used to sidestep a recent decision by the state Public Utilities Commission that sets out how interconnection costs are divided between developers and utility National Grid, which owns and maintains the power system in Rhode Island.

The decision followed a years-long dispute between Wind Energy Development and National Grid over the costs to upgrade wires and poles and make other improvements to accommodate the Coventry wind farm. The price tag for that work, under the current PUC decision, stands at about $12 million, with Wind Energy Development picking up about half and National Grid responsible for the remainder, DePasquale said in an interview.

DePasquale and his representatives argue that the decision is unfair to developers. And they have worked to get the decision modified in the General Assembly.

The critics speak out

“[The budget provision] is clearly designed to benefit one company that has perceived issues with National Grid,” said Rep. Jared Nunes, a Coventry Democrat. “We’re circumventing the processes that were put in place, all to benefit one guy.”

Echoing the concern, Rep. Michael Marcello, D-Scituate, said he will propose one or more amendments during Wednesday’s House budget debate to “shift the burden back to the developer’’ and take out the retroactive language.

Getting past the technicalities, Marcello said: Experts debated the issues with other experts before the PUC. “They got a decision they didn’t like … They come running to the legislature … We are not experts in tariffs or electric generation.”

“It’s just bad policy,’’ Marcello said of the legislature’s intervention. “And it really has nothing to do with the state budget, which should raise some concerns.”

Nunes agreed. He said the provision doesn’t belong in the budget but should be in a separate bill that can be debated by legislators and experts in hearings.

That is, in fact, where the provision started. The language it contains is identical to legislation that was introduced by Carnevale, D-Providence, in the 2015 General Assembly session and again this year that won approval in the House, but failed on both occasions to get past the Senate. Carnevale, a Providence Democrat, is vice chairman of the powerful House Finance Committee.

A former vice president of the Providence police union, Carnevale retired from the Providence police force in March 2007 with a disability pension. A state representative since January 2009, his district includes sections of Providence and Johnston.

Carnevale, who did not have an opponent in his 2012 and 2014 runs for reelection, could not be reached for comment via email, phone or a visit Sunday to the address at which he is registered to vote: 150 Barbara Street, Providence.

In a letter objecting to the language when it was presented in Carnevale’s bill, the PUC said it would “nullify” the agreement on interconnection costs reached over several months of hearings and discussions last fall and winter.

National Grid argues that the budget language could have far-reaching effects because it broadens the definition of the costs that it is responsible for – to anything that could be considered a benefit to other customers. Those costs, the utility contends, would inevitably be passed on to ratepayers.

“Approval of this measure would make Rhode Island the only state in the nation where developers would be subsidized by ratepayers for construction of the link between their for-profit generation facilities and the electric transmission or distribution system,” the company said in a statement.

When reached on Sunday, DePasquale denied that the provision would impact ratepayers in any way, but in a subsequent conversation, his lawyer acknowledged that ratepayers could pick up a greater share of the costs for interconnection.

“We’re trying to create a better balance for a new energy economy,” attorney Seth Handy said.

Provision also has a timetable

National Grid and legislators who oppose the provision point to another section that they say is troubling. It puts in place a hard-and-fast timeline requiring all interconnection work to be completed within 360 days of an initial application. No exceptions are allowed. Even if the work is delayed because a developer does not provide required information – which, the provision says, must be solicited beforehand – National Grid would be subject to financial penalties.

In its statement, National Grid called the proposed timeline “arbitrary” and said the language does not even allow for delays that could be caused by bad weather or other factors outside its control. DePasquale said the timeline is necessary to comply with strict deadlines put in place by Independent System Operator-New England, the entity that manages the regional power grid.

In an interview, David Graves, a spokesman for National Grid, said that connecting renewable energy projects to the power grid can be expensive and take a long time because the electric system was never designed to accommodate wind turbines or solar arrays.

The New England grid was built over decades to bring electricity from hundreds of large power plants to homes and businesses in the six states, but it has grown infinitely more complex as thousands of smaller renewable projects have been developed in recent years.

The Coventry project, located in a rural part of town, is a prime example of the difficulties in connecting renewable energy projects to the power grid. The scope of the project evolved over time and at one point National Grid estimated that Wind Energy Development would have to pay $12.8 million to connect all 10 turbines to the grid. That cost was ultimately divided as plans changed and talks played out between the two sides, but DePasquale’s company is still paying for seven miles of new lines.

DePasquale has alleged that National Grid has purposely delayed the Coventry project and artificially inflated costs.

“National Grid acts as a gatekeeper for interconnection and has clearly obstructed the efforts to interconnect these turbines,” he testified to the PUC in an arbitration case.

But the arbitrator disagreed.

“Mr. Depasquale is in the unenviable position of being the first developer in Rhode Island to propose a large multi-project installation of distributed generation,” wrote Cynthia Wilson-Frias, deputy chief legal counsel for the PUC. “He has chosen an area that has not seen load growth requiring upgrades in recent history. There are bound to be unexpected challenges.”

The language in the Carnevale bill was proposed by Wind Energy Development in a separate PUC docket that followed the arbitration process. The state Division of Public Utilities and Carriers, which represents ratepayer interests in PUC dockets, opposed all of the company’s proposals, saying they went against industry norms in the United States. In its decision, the PUC also rejected the proposals.

Carnevale’s bill

Wind Energy Development was the only renewable energy company to have representatives who testified at a hearing on Carnevale’s bill before the House Corporations Committee in January. The Narragansett Bay Commission, which owns three wind turbines on the Providence waterfront, submitted a letter in support of the legislation. The state Office of Energy Resources also expressed support for the bill.

Handy, the lawyer for Wind Energy Development, argued the company’s case in a letter to the committee.

“It is wrong for National Grid to frame this as a shift in development costs from renewable energy developers to ratepayers,” he wrote. “It is fundamentally National Grid’s obligation to operate, maintain and improve its distribution system.”

At the hearing, Carnevale gave his assessment of how National Grid had maintained the power system in Rhode Island.

“It was mismanaged,” he said.

When asked at a budget briefing on Thursday if the budget provision was aimed at helping Wind Energy Development, House Speaker Mattiello said he was not familiar with the company. After the briefing, he said he did not immediately recognize the company’s name but he acknowledged that he knows DePasquale.

Mattiello then discussed a different section of the provision relating to “net metering,” one way of crediting the owners of renewable energy systems for the power they produce. That section of the provision would also affect DePasquale’s business.

‘I mean, he is one of the interested parties … so of course we talk to everybody,” Mattiello said. “I would say there’s advocates on both sides of that issue.”

The speaker’s office offered a follow-up statement on Friday.

“The goal of this budget article is to continue to grow renewable energy in Rhode Island and ensure the benefit flows to the taxpayers,” the statement reads. “This article is still a work in progress and we will likely be offering amendments.”

Source:  By Alex Kuffner, Journal Staff Writer | By Katherine Gregg, Journal State House Bureau | Providence Journal | Jun. 12, 2016 | www.providencejournal.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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