RI Court: Block Island must pay for power link to the mainland

The Block Island Power Co. has lost a lengthy court battle over who should pay for certain power equipment that was installed when the Block Island Wind Farm went live in 2016.

The Rhode Island Supreme Court ruled earlier this month that billing costs of around $336,000 per year for a $1.8 million power interconnection facility must be borne by around 2,000 ratepayers on the island, and not by ratepayers statewide.

"It's a big pill to swallow," said Jeffrey Wright, president of Block Island Power in an interview with Business First.

The interconnection equipment lets the small municipal utility buy wholesale power from the New England power grid, instead of from the diesel generators the island relied upon before the 30-megawatt wind farm was constructed.

The equipment in question is connected to a 22-mile undersea transmission cable that links the island with the mainland. That cable, first built by National Grid, is now owned by Rhode Island Energy, and lets the larger utility purchase the wind farm's power and its renewable energy credits, or RECs.

The high court, in its 22-page decision, upheld a 2017 decision by the R.I. Public Utilities Commission that sided with National Grid.

The court's ruling hinges upon the meaning of the phrase "related facilities" under a 2009 law that let the wind farm move forward. The Block Island Power equipment, including a backup transformer, is not a "related facility" to the export cable, so its costs can't be captured in a statewide utility tariff, the court decided.

"We fought a strong battle," said Wright.

Wright explained that the island does not actually buy power from the Block Island Wind Farm, even though its five turbines are only four miles off its coast. The wind farm's power is instead purchased by Rhode Island Energy. But Block Island's participation in the project — and the interconnection equipment it paid for — allowed the island to retire its dirty diesel generators by connecting to the regional grid.

Wright opined that Block Island's contributions to the state's aggressive clean energy goals are not recognized by the court ruling. The island hosts the wind farm's cable landing and other essential infrastructure. Its utility customers also paid for the contested connection equipment that resulted in displacing a million gallons of diesel fuel per year.

"And that's just the diesel fuel that we burned on the island," Wright said. "You've got to get it here, you've got to truck it here, you've got to ferry it over. We freed up 110 tractor-trailer trips on the ferry every year."

For all of their efforts, Wright said, Block Island Power customers are instead being hit with a monthly "direct assignment facilities charge" of 2.5 cents per kilowatt-hour to pay for equipment which he asserts is integral to the wind farm project and the larger utility contract.

The court ruling referred to $2.5 million in equipment costs. But Wright said it's actually around $1.8 million because Rhode Island Energy, National Grid's successor, offered to provide an expensive backup transformer if needed. "They did the right thing," he said.

Wright said that Block Island is proud to support the nation's first offshore wind farm. Still, he thinks the island could have gotten a better deal.

"I wish I had been sitting at that negotiating table," he said.

The decision by the state's highest court closes the door to further appeal.

"We hold that 'related facilities' clearly and unambiguously excludes the costs of BIPCo's interconnection facilities and backup transformer," the court ruled.