Another amended version of the East Bay Energy Consortium bill has appeared on the General Assembly website. This latest version of S2870 would allow two (or more) town/city councils to get together and create a corporation for the newly defined “essential governmental function” of developing “renewable energy resources”. A corporation created under this law would not be able to issue bonds — this version of the bill says so explicitly — but would be able to create “notes or other obligations”.
If the project fails or is substantially delayed, who would be on the hook for these “notes or other obligations” is not clear from the law. To be able to sell “notes or other obligations” as “risk-free” municipal-grade investments, the corporation will need to be able to point to a method for raising revenue that is guaranteed to be there in the future, such as access to direct government appropriations or the ability to add surcharges to energy rates. If there is no public backstop, meaning that money to pay back the “notes and other obligations” might not be available and there is a real possibility of default, then interest rates on the “notes and other obligations” issued by the corporation will be high, and how the corporation provides any advantage over more conventional methods of financing, from the perspective of taxpayers and ratepayers, is uncertain at best.
Could the same end-of-session process that has led many Rhode Island legislators to claim they didn’t know what they were voting on when they approved the 38 Studios loan guarantee program be used to speed an East Bay Energy Consortium bill through the RI General Assembly this year? Two years ago, a bill modifying the Economic Development Corporation’s loan guarantee program to provide for the 38 Studios flew through the final three days of the General Assembly session. A Senate Committee passed the bill two days before the Senate adjourned. The full Senate passed the bill on the day after that. The bill then went from the Senate directly to the House Floor calendar (no House committee hearing was involved; this appears to be allowed by the rules after the budget has been passed) and was approved by the full House on the final day of the session.
The East Bay Energy Consortium bill goes before the Senate Environmental and Natural Resources Committee this afternoon, on what is expected to be the day before adjournment of the 2012 General Assembly session. Legislators, in both chambers, whether in committee or floor sessions, should not vote to approve S2870 in any form until they understand — and can explain to the public — who it is that will be assuming the real risks that this bill enables.

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The path of the Senate version of the 38 Studios bill, as reported by the Rhode Island General Assembly website:
Senate Bill No. 2923 SUB A
Chapter 29
BY DaPonte, Connors, Felag, Ruggerio, Lynch
ENTITLED, AN ACT RELATING TO AUTHORIZING THE ECONOMIC DEVELOPMENT CORPORATION TO CREATE THE JOB CREATION GUARANTY PROGRAM (would authorize the economic development corporation to issue revenue bonds or guaranty obligations that result in the creation of jobs in Rhode Island)
{LC2672/A/1}
05/20/2010 Introduced, referred to Senate Finance
05/27/2010 Scheduled for hearing and/or consideration
05/27/2010 Committee heard
06/04/2010 Scheduled for hearing and/or consideration
06/04/2010 Committee recommended measure be held for further study
06/08/2010 Scheduled for hearing and/or consideration
06/08/2010 Committee recommends passage of Sub A
06/09/2010 Placed on Senate Calendar
06/09/2010 Senate passed Sub A
06/10/2010 Placed on House Calendar
06/10/2010 House passed Sub A in concurrence
06/11/2010 Transmitted to Governor
06/11/2010 Signed by Governor