Opponents file challenge to Block Island wind farm in federal court

PROVIDENCE — Opponents to the offshore wind farm under construction near Block Island have filed a case in federal court seeking to overturn a critical agreement under which developer Deepwater Wind will sell power to utility National Grid.

The complaint was filed last Friday in U.S. District Court in Providence by Benjamin Riggs, Laurence Ehrhardt and the Rhode Island Manufacturers Association. Riggs, a retired manufacturing executive who lives in Newport, and Ehrhardt, a North Kingstown Republican who served in the Rhode Island House of Representatives from 2005 to 2012, are both long-standing opponents of the five-turbine wind farm.

Among the members of the manufacturers association is Toray Plastics, which operates a factory in North Kingstown that is the single largest user of electricity in the state. Toray has tried unsuccessfully on several occasions to have the contract voided — most notably in a 2011 state Supreme Court case — because of the above-market costs of the wind farm.

Those costs, which are at the center of the court case, are estimated at $497 million over the 20-year power purchase agreement between Deepwater and National Grid. They are so high because the starting price in the contract could be as much as 24.4 cents per kilowatt hour — which is more than double the blended price that Rhode Island electric consumers currently pay for power from conventional power plants and some renewable sources. The starting price escalates 3.5 percent each year of the contract.

The plaintiffs argue that the Rhode Island Public Utilities Commission violated federal laws governing wholesale electricity markets in 2010 when it approved the deal. Electric markets, the complaint says, are the sole preserve of the Federal Energy Regulatory Commission, not state agencies, such as the PUC.

“The PUC’s Order thus usurps FERC’s exclusive role in regulating wholesale transactions, disrupts the wholesale energy markets supervised by FERC, and does so in a manner calculated to favor a new generating facility in Rhode Island over out-of-state facilities that participate in the same regional wholesale markets,” the complaint says.

Riggs filed petitions with the FERC in 2012 and again last April alleging that the PUC’s decision on the Deepwater contract contravened interstate commerce rules and other federal laws. The commission did not dismiss the complaints but it also did not rule on them, Riggs said. He was advised that if he wanted to pursue his complaints, it would have to be in court.

“The current action is limited to asking the federal government to assert its clear authority over the pricing mechanism for the Deepwater project,” Riggs said in an email.

The agreement was key for Deepwater to attract financing for the project, the first offshore wind farm in the nation. The importance of such a pact was demonstrated last year by the Cape Wind proposal in Massachusetts, which fell into limbo after its two power purchase agreements were canceled for failure to meet project milestones.

 "This complaint is just as baseless as the last several complaints filed by Mr. Riggs that were quickly and summarily rejected by the proper authorities,” Jeffrey Grybowski, chief executive of Providence-based Deepwater, said in a statement. “The project is proceeding at full speed.”

A spokesman for National Grid said Monday it had just received a copy of the complaint and was studying it.

This is not the first time federal laws governing energy markets have been invoked in challenging the power purchase agreement. In 2010, before the PUC voted to approve the contract, energy company TransCanada Power said the Rhode Island law governing renewable-power contracts violates the Commerce Clause in the U.S. Constitution because it favors in-state projects.

TransCanada argued that it could sell renewable energy from out-of-state sources at a lower rate than the Deepwater project and sought to cancel the deliberations over the power agreement. The PUC did not grant TransCanada’s motion and ultimately ruled in favor of the agreement.