William Felkner: The Treacherous Waters of Deepwater Wind (Part One of Two)

The Deepwater Wind Project will be heard in both the House and Senate on Tuesday in a last minute attempt to pass legislation that will burden Rhode Islanders with a $500 million "Windmill Tax". Supporters of the Project (which appears to be just the Governor and Deepwater Wind) say the price, 24¢/KWH escalating to 47¢/KWH, could be a bargain some day and will open the door to economic development. Opponents, who come from all political stripes (Common Cause, Operation Clean Government, RI Tea Party, RI Alliance for Clean Energy, Save the Bay, RI Republican Assembly, the Wiley Center and local tea party and tax payer groups, just to name a few), skeptically say they've heard all the promises before.

If you haven't followed the issue, you might be surprised at the twists and turns we've seen.

Deepwater was one of seven respondents to the Governor's non-binding inquiry, but once National Grid made it official, Deepwater seemed destined to become Rhode Island's wind farm. They opened the door with a bid of about 18¢/KWH but, after crowding out the competition, the price went up to 30¢/KWH. When National Grid balked they brought it down to 24¢/KWH. Keep in mind that if the legislature would allow us to purchase the same renewable power from the NEPOOL grid (the regional energy market) we could get it for 9¢.

The only thing standing between Rhode Islanders and a $500 million dollar "windmill tax" increase, then, was a decision by the Public Utilities Commission (PUC), and after numerous expert witnesses from all areas of interest, they rejected the Project with 3-0 unanimous vote.

So a bill was introduced (Senate Bill 2819 from Senator Sosnowski, D-SK) to bypass this ruling and give the approval of this contract over to department heads. Not only does this bill completely disregard the efforts of all the experts who worked with the PUC, but it also opens the door for others to bypass this consumer protection agency as well. And, indeed, it didn't take long to prove this point.

Shortly after S 2819 was introduced, Senate Bills 2841 and 2842 popped up.

S 2841 also bypasses a PUC decision rejecting a request from National Grid to decouple infrastructure costs. The concept is defensible, but the numbers weren't right so the PUC rejected it.

S 2942, on the other hand, doesn't bypass a PUC decision. It bypasses the PUC completely. This bill all but forces energy consumers to purchase renewable energy from a single-source provider (Ridgewood), under a proposed agreement to construct a methane gas energy generating plant at the Johnston Landfill.

But those are small potatoes when compared to Deepwater's "demonstration project" which would be the most expensive public works project in RI history yet only provide 1% or our power and create a paltry 6 permanent jobs. And that's not our estimate; it comes from Deepwater's sworn testimony.

Again, renewable energy is readily available in the 9¢ range. That means if we weren't forced to purchase from Deepwater we could get the same amount of renewable energy for about $400 million less. And, again, that’s not our estimate; it comes from National Grid, the people who will be passing the charge onto our electric bill.

Note that that figure does not include the cost of the cable necessary to get the electricity to the mainland, estimated at a capital cost of $45 million, or nearly $100 million with interest over the 20 year period. And then there is the 2.75% "sweetener" National Grid receives on every renewable contract. The Deepwater deal would bring National Grid an additional $19.25 million.

William Felkner is the President and Founder of the Ocean State Policy Research Institute.