Chafee is seeking shift in control of energy fund

'That $500,000 helps us accelerate bringing people on quicker,' said Scott Depasquale, Braemar Energy Ventures partner.
'That $500,000 helps us accelerate bringing people on quicker,' said Scott Depasquale, Braemar Energy Ventures partner.

The $500,000, no-interest state Renewable Energy Development Fund loan that helped convince UtiliData, Inc. to choose Providence for its future headquarters is the kind of business-enticement deal the R.I. Economic Development Corporation has championed.
The loan leverages a $4.5 million investment from Boston venture-capital firm Braemar Energy Ventures that is spurring UtiliData to leave Spokane, Wash., for the East Coast with a relatively modest public stake.
But the UtiliData deal may be one of the last Renewable Energy Development Fund loans the EDC takes the lead on.
Gov. Lincoln D. Chafee’s proposed fiscal 2013 budget, if approved by the General Assembly, would move the renewable energy fund under the control of the governor’s Office of Energy Resources.
The move is part of Chafee’s plan to streamline state government and focus decision-making within his administration.
Like the EDC, energy-related functions now held by the Department of Environmental Management and those of the Energy Efficiency and Resource Management Council will also be shifted to Office of Energy Resources control, according to the budget.
“The concern is that policymaking and programs on [energy] are scattered and we are trying to look at streamlining state government,” state Director of Administration Richard Licht told Providence Business News about the move. “When this fund was originally created it was in the governor’s Office of Energy Resources. A couple of years ago it was transferred.”
Another reason for consolidating work on renewables was the creation by the General Assembly last year of a new renewable energy coordinating council that is just beginning to meet and is chaired by Licht.
As a candidate and in his early days as governor, Chafee was critical of some of the state’s business-incentive deals, but Licht said the move should not be interpreted as a criticism of the renewable energy program or the EDC’s handling of it.
“This is not based on any concern about the performance of the EDC,” Licht said. “It’s a desire to have a more integrated policymaking group.”
The Renewable Energy Development Fund is paid for by an electric-bill surcharge and has a cash balance of $5.8 million. EDC Executive Director Keith W. Stokes said the Renewable Energy Fund had in some ways been an odd fit for the quasi-public agency because some of the money must be spent on residential, municipal and nonprofit projects, which are outside the EDC’s private-sector focus.
Other projects, such as a grant for solar panels at a Bristol car-repair shop, have been described in the past by EDC board members as not having the kind of broad economic impact they would prefer.
Before approving the UtiliData loan, the EDC approved grants for two residential solar projects – one with the former Alteris Renewables (now Real Goods Solar, Inc.) and the other with the West Broadway Neighborhood Association.
While reaffirming the worthiness of both projects, Renewable Energy Fund coordinator Julian Dash said the fund was trying to move away from grants for residential projects toward loans to spur new commercial growth.
That’s why officials were so excited about the deal with UtiliData, which is not only helping lure a knowledge-based company to Rhode Island, but is also piggybacking private-venture capital expertise.
That’s a strategy being used in a number of current economic-development programs, including the federal pass-though State Small Business Credit Initiative and the Providence Innovation Investment Program.
“This is the one that shows where we are going with the Renewable Energy Development Fund,” Dash told the EDC board this month.
In addition to the assurance that UtiliData will move to Providence, the state gets a .0025 equity stake in the company for the $500,000 loan, which is to be repaid in five years or when the company reaches $1 million in earnings.
Founded in Palatine, Ill., in 1983 as Programmable Control Services Inc., UtiliData makes automated computer systems that allow electric utilities to optimize and conserve the flow of energy moving though the power grid.
Braemar Energy Ventures, a midstage investor in energy-technology firms with $600 million under management, is taking a majority stake in UtiliData and financing an expansion of its AdaptiVolt “smart grid” system.
The optimizing software reduces voltage on energy-distribution systems by 4 to 4.5 percent, according to UtiliData, and Braemar is looking to develop hardware and software that can be configured by the utility without having to be customized by UtiliData. Such a change will allow the product to be scaled rapidly, Braemar said in a news release. To do that the company will need to recruit and hire a team of software developers and executives and had identified the Boston, Atlanta and Raleigh, N.C., areas as the best sources for that talent.
Braemar Partner Scott DePasquale said Providence’s proximity to Boston and comparatively cheap real estate made it an attractive choice that city and state officials made even more compelling with their financial assistance and eagerness.
“Relative to the folks we talked with in other states, the EDC and Rhode Island were the most aggressive and most helpful,” DePasquale said. “That $500,000 helps us accelerate bringing people on quicker. We saw Providence as part of the Boston area and compared with other geographies could not find such an accommodating space with really good real estate options.”
UtiliData is leasing space in the Foundry complex on Promenade Street in Providence and should begin moving workers there at the beginning of March, DePasquale said.
As part of the loan agreement, UtiliData had agreed to have eight workers here by the end of the year and 47 by 2015.
With reducing the unemployment rate a priority, the EDC’s successful work luring UtiliData here with the Renewable Energy Fund is not something Chafee wants to disrupt.
Licht said the Office of Energy Resources’ use of the Renewable Energy Fund should be “similar” to what it has been under the EDC.
Decisions on where the current renewable energy staff would be deployed have not been made, with the legislature yet to have its say.
Licht added that the appointment of a permanent director of the R.I. Office of Energy Resources, a post now vacant, will also play a part in determining how the renewable fund is used.
“When the office is filled, hypothetically there could be a more laser-like focus on one area with a different set of eyes in charge,” Licht said, “but not necessarily so.” •

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