Deepwater Wind Not Just a Demonstration ProjectWake up Rhode Island! Do you realize that Deepwater Wind’s proposed wind farm off Block Island would foist more than a half billion dollars of increased electricity costs onto Rhode Island’s ratepayers. If this weren’t enough, Deepwater has a history since December, 2011 of arrogance. Three mainland cable alignments have been proposed by Deepwater and all have been withdrawn - a shameful record indeed. Since the Narragansett Town Council's disapproval of easements at the town beach last August, the scene has shifted to Scarborough State Beach.Deepwater appears to have adopted a strategy of requesting a string of limited permits at multiple public hearings, each involving narrow decisions. By this tactic, they clearly hope to avoid comments about the big picture. Deepwater Resistance is very concerned with the big picture, among them the exorbitant rates for electricity approved by the PUC in 2010.To lay out clearly the socioeconomic effects, we’ve developed a financial snapshot of this proposal based solely on figures from PUC docket 4185 and Deepwater’s ER. These figures represent the cumulative totals over the wind farm’s 20 year life.A) total revenue:$866 million;B) capital investment:$183 million;C) oper. + maint. costs:$176 million;D) total gross profit:$507 million;E) excess costs paid by ratepayers: $595 million.Item E is the extra cost all Rhode Islanders will pay above the anticipated future cost of electricity from all other sources (“standard offer rate”). That’s an average of $30 million per year to be borne collectively by residents and businesses. Ratepayers should view the excess costs as equivalent to an annual $30 million extra state tax. The sole socioeconomic benefit is a minuscule 6 permanent jobs by Deepwater’s own admission.In any case, Deepwater should be required to write a NEPA compliant environmental impact statement (EIS) because first, the venture is a private, for-profit company and second, it is not a minuscule project as evidenced by its very significant $866 million of anticipated revenue. Since both conditions would apply here, Deepwater should be obligated to file a formal EIS.Deepwater’s scheme is much more than just a “demonstration” project. It should be considered a commercial scale project intentionally designed to provide exorbitant profits for Deepwater Wind and Wall Street’s DE Shaw, its backer. Ratepayers will foot a $595 million bill for this highly risky venture! And, DE Shaw will walk away with $507 million before taxes. Hardly seems fair, right? In fact, this project is hyper-profitable when gauged by a normal return on investment expected in the private sector. In my entire career as a chemical engineer in private industry, no demonstration project I ever witnessed had revenue intentionally exceeding costs; the production was sold at cost.Deepwater should be required to renegotiate the rate structure to make it profit neutral and scale back the venture’s size. Simple arithmetic reveals that they would still make a small profit if their charge for electricity were reduced to $0.15 per kWh with a zero escalation factor. Remarkable! We invite the PUC to verify this estimate. The turbine array should be down sized and the capacity of the undersea cable, be reduced.A contractor in the private sector with a 2 year record of three failures would have been fired for incompetence long ago. It’s time for the regulatory agencies to remove the undersea cable totally from Deepwater’s responsibility and require National Grid to engineer and lay the cable. National Grid has the expertise to do it; Deepwater does not. In contrast to Deepwater’s unconscionable profits anticipated from this proposal, the PUC has under consideration a tentative power purchase agreement (PPA) under study between Champlain Wind and National Grid RI, for power generated in Maine using land based turbines at a very much lower cost - about 1/3 of Deepwater’s initial rate - and not including any cost escalation factor. It’s a matter of public record that both Connecticut and Massachusetts are actively negotiating PPAs for terrestrial wind farms and solar generation at 8-9 cents per kWh.At December’s Conference of New England Governors, alternative sources for electricity generation were discussed. In its closing policy statement, all governors endorsed the following alternative power sources: enhanced regional grid, Canadian hydropower, solar, terrestrial wind, and natural gas. Significantly omitted from their list was offshore wind. During an interview January 8thon RIPR, Governor Chafee announced his support for that compact, hardly an endorsement of the Block Island proposal.Does the legislature have the $595 million cost to ratepayers on their radar? It’s a project which would cost Rhode Island’s residents and businesses collectively 6.5 times more than the 38 Studios debacle. Facilitating the PUC’s approval of their outrageous rate structure, the enabling 2010 legislation is without parallel. No regulated public utility would ever be allowed such a similar coup. The legislature cannot escape its fiduciary obligation to bring a bill to the floor repealing that audaciously intrusive act.Nobody truly concerned about excess costs in our state’s weak economy would approve Deepwater’s latest scheme.Bob’s letter to the press September 20, 2014Bob Shield’s Complaint is now in the hands of the RI Supreme Court. We expect to hear on January 12 if the court will accept his case.
Bob Shields.Bob is a retired project engineering manager. He and his wife donate their time to making Narragansett a better place to live..
Nobody truly concerned about excess costs in our state’s weak economy would approve Deepwater’s latest scheme
“The RI Public Utilities Commission, upon reviewing the initial proposal for the project, denied approval for the project to proceed based upon its finding that the project was not economically viable.”