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EDC, company predictions disagree on economic impact of RI wind farm

"I have seen no testimony from any party that assures the state that these economic development events will happen, and I am of the opinion that they will not happen," Edward M. Mazze, distinguished university professor of business administration at the University of Rhode Island, said in written testimony filed on Monday. Mazze testified on behalf of Toray Plastics America and Polytop Corp.

An analyst hired by the state Economic Development Corporation estimates that the direct economic benefits for Rhode Island of a small offshore wind farm would be $92 million to $107 million, depending on how the number is calculated.

In filings submitted to the state Public Utilities Commission on Tuesday, Seth G. Parker, vice president of the Boston-based consulting firm Levitan & Associates, said that the benefits of Deepwater Wind's proposed eight-turbine project would be centered on the Quonset Business Park, where the project would be staged, and Block Island, which would receive cheaper energy from the wind farm.

"In the near term, Deepwater's planned facilities represent a significant investment and its commitment to the region could create over one hundred local jobs throughout the life of the [wind farm]," Parker wrote.

In the longer term, the small wind farm and the second, a 100-turbine project planned by Deepwater, could position Rhode Island as a center of the country's offshore wind industry, he said.

"Quonset Business Park is well-positioned to serve as the nexus for offshore wind project business activities," he wrote. "There is significant offshore... more [truncated due to possible copyright]  

An analyst hired by the state Economic Development Corporation estimates that the direct economic benefits for Rhode Island of a small offshore wind farm would be $92 million to $107 million, depending on how the number is calculated.

In filings submitted to the state Public Utilities Commission on Tuesday, Seth G. Parker, vice president of the Boston-based consulting firm Levitan & Associates, said that the benefits of Deepwater Wind's proposed eight-turbine project would be centered on the Quonset Business Park, where the project would be staged, and Block Island, which would receive cheaper energy from the wind farm.

"In the near term, Deepwater's planned facilities represent a significant investment and its commitment to the region could create over one hundred local jobs throughout the life of the [wind farm]," Parker wrote.

In the longer term, the small wind farm and the second, a 100-turbine project planned by Deepwater, could position Rhode Island as a center of the country's offshore wind industry, he said.

"Quonset Business Park is well-positioned to serve as the nexus for offshore wind project business activities," he wrote. "There is significant offshore wind potential in the New York and southern New England region and significant interest on the part of New England states for renewable resources to attract supply-chain manufacturing and operations investment in Rhode Island."

But an economist hired by two companies with factories in Rhode Island and that oppose the wind farm filed testimony this week that any economic benefits to Rhode Island are speculative.

"I have seen no testimony from any party that assures the state that these economic development events will happen, and I am of the opinion that they will not happen," Edward M. Mazze, distinguished university professor of business administration at the University of Rhode Island, said in written testimony filed on Monday.

Mazze testified on behalf of Toray Plastics America and Polytop Corp. He made no reference to the EDC's report.

The filings were made as part of the PUC's review of the latest proposed power-purchase agreement between Deepwater Wind and electricity utility National Grid. The PUC rejected the original contract last March because it judged the starting price of 24.4 cents per kilowatt-hour to be too high.

A law signed by Governor Carcieri in June allowed the two sides to present a new contract to the commission for an expedited review. It also required that the EDC hire an independent consultant to analyze the amended agreement.

Parker reviewed the contract to judge whether it allows for a decrease in pricing and whether it is "commercially reasonable for a project of similar size, technology and location" and meets the goals of the law. He also prepared a report on the economic benefits of the wind farm.

The amended agreement between National Grid and Deepwater caps the starting price at 24.4 cents per kilowatt-hour in 2013, when the wind farm is expected to come on line. The price is more than double the current standard offer rate of 9.5 cents per kilowatt hour that National Grid pays for energy from conventional sources.

The new contract allows the starting price to go down if the actual cost of building the wind farm is less than the estimated $205 million. The new price would then escalate by 3.5 percent annually over the 20-year contract. The starting price could also go down if the project produces more wind power than predicted.

Parker concluded that the Deepwater contract is commercially reasonable and does leave open the possibility for a lower starting price.

In his report on potential economic benefits, Parker's company used a modeling system to predict the effects of the Block Island wind farm and the 100-turbine project mainly through job creation. He values the benefits attributable to the larger wind farm at $659 million to $886 million.

For the Block Island proposal, he looked at jobs in fields that include project development, engineering and fabrication. He estimates an increase from 44 jobs this year to 58 next year, and then to 122 in 2012 at the height of construction. The figure drops to 26 in 2013. Deepwater has said that the wind farm will create 6 permanent jobs in operations and maintenance.

Mazze, however, said in his testimony that the wind farm could lead to job losses at Polytop and Toray Plastics because it would increase energy costs.

"The [project] will result in higher energy prices for them, which will cause the companies to look for savings in other areas such as personnel," Mazze said.


Source: http://www.projo.com/news/c...

JUL 21 2010
http://www.windaction.org/posts/27328-edc-company-predictions-disagree-on-economic-impact-of-ri-wind-farm
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