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.

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13 years ago

We really should name this the Backwater Wind Project. Any kind of innovation or investment is frowned upon around here. It really is embarrassing. Sorry Deepwater Wind but we don’t want your corporate headquarters in Providence, we don’t want your turbine manufacturing jobs in Quonset.
No no no!
We are backwater. We are coastal Appalachia.
Have always been and will always be.
We like being backwater.
No wait we looooove being backwater.
So take your project and take your jobs and take your tax rev and go away.
Go to another state that understands growth comes with investment.
This is backwater territory.

Warrington Faust
Warrington Faust
13 years ago

This would seem another case where the wisdom of “Never be first, never be last” has some application.
I do not see the point in being at the forefront of this “emerging technology”. I see no long term advantage to Rhode Island.
If electricity at the proposed rates ever becomes “a bargain”, I assume that the technology will have become cheaper. The wind and the water will still be there.
Meanwhile there are competing technologies that may prove more advantagous to Rhode Island. For instance, Rhode Island also has significant tidal motion.
Given the intial investment, which Rhode Island does not have readily at hand, I do not see any guaranteed return on investment.

John Hopf
13 years ago

I appreciated your presence at the hearings Monday
I could not attend Tuesday but my Deepwater rebuttal “The Kings New Clothes” will appear as letter to the editor in B.I. Times Friday
J R Hopf New Shoreham Conservation Commission

13 years ago

There are two types of people who support this project. 1 – People who will benefit financially from this going through. 2 – ‘Green’ advocates who have not read the details or swallow everything that Deepwater is sating publicly while they present secret facts that are not public to the PUC. First National Grid calculated the real cost at 31.5 cents/kwh when the cost of the power cable to the mainland is included. Add the 2.75% bribe to National Grid who is not allowed to profit from power sales since the boondoggle of deregulation (hows that worked out?) and the initial cost id 32 cents/kwh. After 20 years that 62 cents/kwh with the 3.5% annual multiplier. National Grid removed the cost of the power cable from the calculation yet no one has addressed how that will be paid for. I know believe the tooth fairy will leave $50 million under ratepayers pillows so we can pay for it. The PUC said it creates SIX permanent jobs – thats it. The PUC said the project will cost ratepayers $500 million above market costs over 20 years (that I believe was the original headline after the contract was rejected). DeepWater has never built anything anywhere for anyone. When they were handpicked in 2008 Carcieris spokesperson claimed that by 2012 they would be selling electricity to us for 7-9 cents/kwh. DeepWater is not a manufacturer. They will hire contractors to assemble, stage and install the components and then those people will go home. The turbines will not be ‘manufactured’ here thats a fairytale. This is the same type of ‘innovation’ that created the credit union crisis except bigger. We’ll be paying for this mistake for a long time. Wind power is being offered to New York state consumers for 13.7 cents/kwh directly as… Read more »

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