Energy

Justices hear wind farm appeal

R.I. SUPREME COURT justices heard arguments Wednesday over the price of electricity from an offshore wind farm planned by Deepwater Wind.
Posted 4/11/11

PROVIDENCE – Two plastics manufacturers told R.I. Supreme Court justices the price of electricity from a planned offshore wind farm failed to meet a “commercially reasonable” test spelled out in state law.

A lawyer representing Toray Plastics (America) Inc. and Polytop Corp. said Wednesday that the farm planned by Deepwater Wind would add millions of dollars to the companies’ electric bills.

And the lawyer, Mike McElroy, said the R.I. Public Utilities Commission overlooked economic drawbacks of the project when it approved a power-purchase agreement between Deepwater Wind and National Grid last summer.

“You can’t have a commercially reasonable contract without looking at the costs and benefits,” McElroy said. “If you’re only looking at benefits you’re only looking with one eye at it.”

Chiefly, McElroy complained about the cost of the electricity from the farm of five to eight turbines planned off Block Island. The wholesale price would start at 24.4 cents a kilowatt-hour and rise by 3.5 percent annually.

In a filing with the PUC, National Grid estimated electricity from the wind farm would ultimately cost the utility $409 million to $415 million more than power from traditional sources such as natural gas plants. McElroy said that would place a burden on big electric users such as Toray, which would pay $7 million more for electricity over the life of the 20-year contract.

McElroy also questioned how the PUC could determine the reasonableness of the price without considering the cost of an electric cable from Block Island to the mainland. McElroy argued the cable constituted part of the project under the law that governed the PUC review of the contract. But he said the commission never weighed how the $40 million to $50 million cable would affect the price of electricity.

The attorney for National Grid and Deepwater Wind, Gerald Petros, acknowledged the wind farm would not be built without a cable. But he said that under law, the cable represented a distinct project and the costs of the cable would be considered separately.

Petros said including the cost of the cable would have created an unfair comparison to other wind farms, most that connect directly to the mainland. The Block Island wind farm would connect to the island and then, via a second cable, connect to the mainland.

An expert who testified for National Grid considered only the cost of the cable from the farm to the island in his cost comparisons with other farms. Factoring in the second cable, Petros argued, would unfairly place the Deepwater farm at a disadvantage compared with farms that have just one connection to land.

“It’s either included in both or it’s included in neither,” Petros said. “It wasn’t included in this case to compare apples to apples.”

The lawyer also charged that Toray and Polytop were overlooking the long-term economic impact of the farm. He said the Block Island project would position Rhode Island to lead the way in offshore wind farm research, labor and construction.

“The bet is we’ll profit enormously in the long term by getting in first,” he said.

In a rebuttal, McElroy rattled off a list of proposed wind farms that would sell electricity at cheaper rates. And he ran down a list of users – from municipalities to companies – that would see their electric bills increase because of the Block Island project.

“Sure we’d like to be in the water first, but you can’t do it at any price, at any cost,” McElroy said.

A decision by the court is expected in the coming weeks.

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