Governor vetoes key renewable energy bill

Governor Carcieri has vetoed a key renewable energy bill passed by the General Assembly that was designed to foster private investment in major renewable energy projects and shift the state away from its reliance on traditional fossil fuels.

The bill would require National Grid to enter into "commercially reasonable" long-term contracts with renewable-energy developers to purchase their electricity. That requirement would give assurance to prospective developers that there would be a buyer for the electricity produced by the project.

"It is with much regret that I find it necessary to veto this legislation," the governor said in a veto statement issued this morning. "Unfortunately, I believe the legislation before me today fails to balance our desire to invest in renewable energy with the realities that ratepayers currently endure."

The governor gave three reasons for his veto. He said he took issue with a provision in the bill that would give National Grid a bonus payment of 3 percent of the renewable energy contracts it entered into, once the project began operations. Electricity customers would have paid for the bonus.

National Grid has said that if it enters into these long-term renewable energy contracts, the cost to borrow money throughout the company would have been more expensive. The payment would have offset those additional costs.

According to calculations by The Providence Journal, National Grid would receive at least $2.8 million a year if it could purchase the required amount of power at a rate of 11.5 cents per kilowatt hour. (That is the rate National Grid is seeking to charge for electricity as of July 1.)

But the governor, echoing arguments made by some legislators, said that any bonus to enter into long-term contracts was "unnecessary and unearned."

Secondly, the governor said another flaw in the bill was that it did not require National Grid to enter into renewable energy contracts from developers who are building a project within Rhode Island. The bill required that the project provide some economic benefit to Rhode Island, but did not require it to be located here.

While it may be true that a renewable energy project located in Massachusetts, Maine or Canada could provide some economic benefit to Rhode Island, projects based here "deserve greater weight."

Lastly, the governor said the most troubling provision was a requirement that 5 megawatts of the renewable energy contracts must come from a Rhode Island-bases solar energy project.

"While it's encouraging to see a Rhode Island project get priority, it's unfortunate that the General Assembly picked perhaps the costliest renewable technology and decided to give it, and only it, preferential treatment."

He said that a recent study by the University of Rhode Island Partnership for Energy report found that the state is not well-positioned for large-scale solar power.

"I'm confident that working with legislative leaders, environmentalists, energy producers and ratepayers we can come up with a better way to support investment in renewable energy projects in Rhode Island," Carcieri said.