Rhode Island: A corruption of process

Earlier this year, the Rhode Island Public Utilities Commission (PUC) disapproved the terms of the a power purchase agreement negotiated between utility giant National Grid and Deepwater Wind LLC. Deepwater proposed to construct a pilot wind project in shallow water off Block Island consisting of 6-8 turbines and a nameplate capacity of up to 30 megawatts.

The agreement contained an initial bundled energy price (energy, capacity, renewable credits) of $244 per megawatt hour (24.4 cents a KWh) with a 3.5% escalation factor each year. According to testimony submitted to the PUC (RI PUC Docket 4111), long-term prices for renewables located elsewhere in the region were significantly cheaper at $80 and $120 per MWh. The RI PUC ultimately found the agreement was not commercially reasonable and withheld its approval.

Absent a signed agreement, Deepwater could not secure investors and the project stalled.

Outraged by the decision, Rhode Island's Governor Carcieri backed a hastily drafted bill introduced by State Senator V. Susan Sosnowski that would pave the way for the power purchase agreement to go into effect without approval of the PUC. Backers of the bill (S2819) argued the PUC misinterpreted the standard for determining what was commercially reasonable; the new legislation removed the Commission from the regulatory process.

The bill was an obvious attempt to circumvent established process allowing the Governor to ram through his pet renewable on the backs of Rhode Island ratepayers. Even supporters of the wind project found this legislative action untenable.

By mid-May the bill was held up by the Senate Environment and Agriculture Committee. Chairwoman Sosnowski announced she was awaiting amendments to the bill that would give Carcieri what he wanted and still placate objectors.

Yesterday (Jun 7), with just three days left in the legislative session, the Committee released an entirely revamped S2819. The new text, tailor-made for Deepwater, reintroduces the PUC back into the process but with legal constraints that all but force the Commissioners to approve the purchase agreement.

Attorney General Patrick C. Lynch issued a statement where he correctly stated the new bill would make the PUC "Deepwater's rubber stamp for a pre-rigged outcome that will be disastrous for Rhode Island ratepayers and businesses, costing them nearly $400 million above the market price of electricity over the next two decades."

The message is clear and corrupting: renewable generators need only apply and Rhode Island will approve, no matter the cost, benefit, or impact of your project.

This action by the Governor and the legislature should be widely denounced by the public, ratepayer advocates, other energy providers, and in particular by those who still believe governmental process has purpose beyond satisfying the narrow wants of those in power.