Offshore wind bill on hold over question of incentive for utility
Credit: Offshore wind bill in limbo over question of incentive for utility | Alex Kuffner | The Providence Journal | June 16, 2022 | www.providencejournal.com ~~
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PROVIDENCE – A bill to buy more offshore wind energy that unanimously passed the Senate has stalled in the House because of questions over paying the state’s dominant utility an incentive that could amount to millions of dollars.
The Senate version of the bill that was approved last week was amended to take out a payment to Rhode Island Energy equal to 2% of the value of any contracts it signs with offshore wind companies. Based on past contracts, the incentive could total at least $3.2 million a year and it would be borne entirely by the state’s 500,000 electric ratepayers.
The Senate Committee on Environment and Agriculture removed the incentive after finding no evidence to justify giving the utility extra money. State regulators came to the same conclusion when the remuneration issue came before them several years ago and the utility argued that carrying long-term offshore wind contracts on its books could harm its credit rating.
But House leaders are considering keeping some level of incentive in their version of the bill, according to legislators in both chambers. The issue is the subject of negotiations with the Senate and has put a hold on a piece of legislation that supporters say is necessary to meet Rhode Island’s climate goals.
When asked about the bill and the question of remuneration, House Speaker K. Joseph Shekarchi pointed instead to language governing contracts in the Senate bill. The Senate version, for example, gives state regulators the power to order the utility to sign a contract.
“I understand the importance of this bill and I am working hard to get it over the finish line this session,” Shekarchi said. “I am concerned about the mandatory contractual terms. I am also working to increase the market competitive procurement from 600 [megawatts] of offshore wind capacity to up to 1,000 MW to better meet the standards we established last year in the landmark Act on Climate legislation.”
Rep. Arthur Handy, the lead sponsor of the bill in the House, said that in a brief conversation after the Senate passed its amended version Shekarchi expressed frustration with the changes, telling him they might be sticking points in the House.
“It sounds like they want to put something back in on remuneration,” Handy, a Cranston Democrat, said of Shekarchi and the other members of House leadership. “I’m not sure it’s the best thing to do if we want to get this back through the Senate. I’m worried that would effectively kill the bill.”
There have been discussions about lowering the incentive in exchange for increasing the size of the procurement, according to legislators. If that were to happen, Rhode Island Energy could still reap millions because the payments are tied to energy sales. The more offshore wind the utility buys, the larger the total payments.
As to talk that Rhode Island Energy is opposed to the bill, the company said it is committed to offshore wind.
“As with all potential legislation that affects the utility, we have simply shared with legislators our views on how we think the legislation could be improved as have other stakeholders,” spokesman Ted Kresse said.
Sen. Dawn Euer, lead sponsor of the bill in the Senate, said she is hearing similar things as Handy about why the legislation has yet to move out of the House Committee on Corporations.
“I fail to see why remuneration is necessary,” the Newport Democrat said. “As we do this energy transition that is necessary, we need to be aware of the regulatory structures that we put in place. We need to be aware of programs that put excess costs on ratepayers.”
She also noted that PPL, the company that took over the state’s main utility and renamed it Rhode Island Energy last month, announced a week ago that its credit rating was upgraded after the transaction, which included previously-signed offshore wind contracts.
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