Rhode Island, Always Striving to Make Life That Much More Difficult

So, with legislation to make energy more expensive for all Americans making its way through Congress, what can one say about this?

Governor Carcieri on Friday signed into law legislation that could pave the way for offshore wind farms in Rhode Island.
The bill, passed by both chambers of the General Assembly earlier this month, allows electrical utility National Grid to enter into long-term contracts to purchase “green” energy. For Deepwater Wind, the company proposing more than 100 wind turbines off the Rhode Island coast, the law means having a guaranteed buyer for its energy, a crucial selling point to investors. The legislation will also benefit other clean-power proposals, including a plan to build a solar farm in Coventry.

The first thing on which to remark is Journal Staff Writer Alex Kuffner’s peculiar choice of the word “allows” to characterize the bill’s relevance to the energy company. Here’s how the General Assembly press release about the legislation puts it (emphasis added):

The House and the Senate each took final votes today approving legislation sponsored by House Majority Leader Gordon D. Fox and Senate Corporations Committee Chairman Joshua Miller to require the state’s largest electric utility to enter into long-term contracts to purchase power from renewable energy producers in Rhode Island.

Under the eye of the state Public Utilities Commission (PUC), National Grid (and any other energy distribution companies that may be lured into the Rhode Island market) will have to enter into contracts with “new,” “green,” “renewable,” whatever energy producers with a duration of at least 10 years. Then, if we turn to the statutory language itself (PDF) we find explicitly what we all should expect implicitly:

The electric distribution company shall file tariffs with the commission fo commission review and approval that net the cost of payments made to projects under the long term contracts against the proceeds obtained from the sale of energy, capacity, RECs or other attributes. The difference shall be credited or charged to all distribution customers through a uniform fully reconciling annual factor in distribution rates, subject to review and approval of the commission. The reconciliation shall be designed so that customers are credited with any net savings resulting from the long-term contracts and the electric distribution company recovers all costs incurred under such contracts, as well as, recovery of the financial remuneration and incentives specified in section 39-26.1-4.

In short, National Grid must enter into decade-long contracts for the purchase of energy at prices consistent not with the energy market in general, but with “newly developed renewable energy resources,” however much more it may cost than regular ol’ energy resources. It then sells the energy at market rate and tacks the “newly developed” premium on the bills of customers across the board. Oh, and the law permits the company to add another 2.75% premium to the cost of the fancy new energy as “incentive.”
Let’s follow the money, shall we? You, energy consumer, will pay more for your usage so that the distributor can, without loss (indeed, with explicit profit), subsidize politically preferred energy sources in order to guarantee sales of an energy product whose risk investors are not otherwise willing to accept. Your money, in other words, is serving to secure investment earnings for others. Those investments, in turn, will flow to land owners, materials suppliers, and workforces. To some degree, the prices of all of those things will be inflated; to the extent that unions are involved, another layer of money-takers slips into the mix; and to the extent that materials, land-owners, and workers reside elsewhere, the money will flow out of the state.
To those parties, the law represents a net benefit, but that requires a net cost to a much larger field of people. That field of people is contained geographically within the borders of Rhode Island, because National Grid has no reason to spread the “renewable” deficit more broadly across its own operations. Moreover, the state is contained geographically within the borders of a nation with a government hell-bent on piling on its own premiums.

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14 years ago

“You, energy consumer, will pay more for your usage so that the distributor can, without loss (indeed, with explicit profit), subsidize politically preferred energy sources”
In fact, this is the big, hairy flaw with all “green” initiatives/jobs/industries funded or mandated by the government. They’ve simply become one more thing that the taxpayer must pay for.
Looking longer term, the claim is that, in due course, these power sources and industries will become economically self sustaining. But will that happen if they’ve got an indefinite, open checkbook (i.e., all of us) to draw from?

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