The Rhode Island Manufacturers Association is all in favor of a cleaner environment for our families, our workers, our communities and future generations. That includes cleaner and more efficient sources and use of energy. Manufacturers lead the way in investing in energy efficiency and advancing sustainability efforts that positively impact manufacturing. We continue to make substantial contributions to environmental protection, economic performance and the social well-being.
Unfortunately, we operate in a global economic environment that at times works to the detriment of that goal. Under globalization, jobs tend to emigrate to the country with the lowest costs. Efforts to improve employee compensation and working conditions, coupled with increasing regulatory compliance in the U.S. have contributed to many job losses.
Energy is another significant cost for manufacturers. U.S. manufacturers depend on an affordable and reliable energy supply to remain competitive. This is especially challenging for our Rhode Island companies, as electricity costs in the Northeast are the highest in the country.
The United States has made great strides in improving its air and water quality, but it comes at a price. As our energy costs go up, more pressure is placed on U.S. companies to outsource manufacturing to countries such as India and China. This trend is harmful to our manufacturing base in the United States, particularly in higher-cost states such as Rhode Island.
This is also extremely harmful to our global environment. That’s because China and India are very inefficient and do not control their emissions as we do here in the United States. They rely heavily on coal. The way they operate their plants has been illegal in this country for decades. Their global warming carbon output as a percentage of annual production is more than five times that of the United States.
RIMA’s objection to the Deepwater Wind project is the pricing mechanism that is in place and how that was established. The overall cost for electricity generated by Deepwater Wind is about four to five times that of natural gas and other renewable energy sources, plus there is an annual 3.5 percent price escalation. According to National Grid, the excess, above-market cost to ratepayers will be about $497 million over 20 years (not including investment tax credits, the cost for the oversize cable, and other direct projects costs).
How can this happen, and on a scale many times larger than 38 Studios? Very simply, we have a federal regulatory system and process in place that governs the purchase and sale of electric power and is designed to protect all consumers from manipulation of the markets. However, as stated in our complaint, it is our position that the Deepwater Power Purchase Agreement does not comply with this regulatory system and federal law. If it did, we wouldn’t have this problem.
Rhode Island resident Ben Riggs filed two separate complaints with the Federal Energy Regulatory Commission (FERC), asking it to intervene. Contrary to Deepwater’s statements, these complaints were not “rejected." The state Public Utilities Commission, National Grid, and Deepwater all filed multiple motions to dismiss his complaints. They were unsuccessful. What the FERC did (or failed to do) was take action. They referred Mr. Riggs to file a complaint in court.
It is important to note that this is not the first time this particular issue has been raised in federal court. Last year, federal court decisions in both New Jersey and Maryland to declare this kind of purchase agreement illegal were upheld by two separate appeals courts.
So what’s the answer for our economy and our environment? RIMA supports an energy strategy that embraces all forms of domestic energy production while expanding existing conservation and efficiency efforts. Oil, natural gas and clean coal remain essential, but we also must invest in other energy sources such as nuclear, alternative fuels and renewables.
However, there must be a balance between the cost and benefit. We operate in a global economy and we must be competitive to survive.
William A. McCourt is executive director of the Rhode Island Manufacturers Association, a member-based organization that supports local manufacturers in legislative and regulatory matters and economic development activities.