Projo 7 to 7 News Blog

At the urging of low-income advocates and a powerful state legislator, the Public Utilities Commission today agreed to lower the down payment needed to restore utility service for customers who lost gas or electricity service because of non-payment.

The two commissioners at the open meeting this morning, Elia Germani and Mary Bray, voted to temporarily amend the rules so that those without service could have it restored by paying as little as 10 percent of an overdue balance. The rules normally require a down payment of at least 25 percent. The third commissioner, Robert Holbrook, was not present.

The ruling is a victory for the George Wiley Center of Pawtucket, an agency that lobbies on behalf of low-income families. The center had initiated the petition, which sought to relax the rules, in July.

The decision comes at a time of unusually high energy bills and predictions that this winter will be even more expensive than last year's record-breaker.

Yesterday's decision did not grant a flat 10 percent for everyone, as the George Wiley center had sought. Instead, the PUC established three down payment percentages, depending on a customer's back bill.

Those who owe under $1,000 will have to pay 20 percent and agree to pay off the rest over a 12-month period; those who owe $1,000 to $2,499 will have to pay 15 percent down, and pay of the rest over a 24-month period. Those who owe $2,500 or more can have service restored with a 10 percent down-payment. The remaining balance would have to be paid over 36 months.

The new payment terms apply to all customers, not just those who are considered "low income."

Normally, a customer would have to pay between 25 percent and 50 percent of the back balance to have service restored. The level of down payment is dependent upon the customer's past payment history, rather than the amount due. A customer who has never broken a payment agreement would be required to pay 25 percent. Those who have broken several agreements would have to pay 50 percent.

The changes are temporary -- they are in effect only until Dec. 1.

Last week, Senate President Joseph A. Montalbano, wrote to the PUC and suggested a three-tier down payment schedule similar to the one enacted yesterday.

"Today's ruling ensures Rhode Islanders have the utilities they need to survive the winter months while affording them some additional flexibility in getting their accounts in order," Montalbano said in a statement yesterday.

The decision will have several impacts. First, it should make it easier for those currently without utility service to have it restored. As of Aug. 31, there were 3,768 electric customers and 3,972 gas customers who remained without service.

Secondly, it will allow the monies the state receives through the federal Low Income Home Energy Assistance Program, or LIHEAP, to stretch further. Part of the LIHEAP money is used for "crisis grants" which go toward paying the back bill of a customer in order to get service restored. Now, more money can be directed to other types of heating assistance.

And lastly, the decision will likely mean that National Grid will have to write off more "bad debt." National Grid said that would be the result of a less flexible plan that the company had recommended. Bad debt is money that the utility company cannot collect from customers. Those debts are then passed along to all customers in the form of slightly higher utility rates.

-- Journal staff writer Timothy C. Barmann

Deepwater Wind, the developer selected last week to build an offshore wind farm off the coast of Rhode Island, has won the bid to develop another major wind farm.

New Jersey officials this afternoon announced they had selected Garden State Offshore Energy, or GSOE, to build the 96-turbine project 16 miles off the New Jersey coast. GSOE is a joint venture of PSEG Renewable Generation, a utility company and Deepwater Wind, based in Hoboken, N.J.

Last week, Gov. Carcieri announced that his office had selected Deepwater Wind to build and finance a $1.5 billion wind farm, 15 to 20 miles off the coast of Rhode Island. It would be one of the largest private development projects ever constructed in the state.

This afternoon, Chris Brown, the chief executive officer of Deepwater, told The Providence Journal that winning New Jersey project will mean more jobs in Rhode Island, where the company plans to build its manufacturing headquarters for the East Coast.

The facility will be located at the Quonset Business Park in North Kingstown, the company said last week. The facility will be used to manufacture the structures to support the wind turbines, derrick-like structures called "jackets," and employ up to 800 people, Deepwater said.

Yesterday's award will mean even more jobs in Rhode Island, beyond the 800 already promised, Brown said in a telephone interview.

How many more?

Brown was reluctant to give an estimate. "That's going to be up to our planning people - significantly more," he said.

Gov. Carceri released a statement heralding the New Jersey development as being good news for Rhode Island.

"This is as much a win for Rhode Island as it is for Deepwater Wind," the governor said.

"By establishing ourselves as an early leader in off shore wind energy production and the center for jacket manufacturing, we gain an important competitive advantage in attracting alternative energy companies, including turbine manufacturers, to the state and in creating new high wage, green energy jobs across Rhode Island."

GSOE has proposed building a 345.6 MW offshore wind facility that would produce enough electricity to power approximately 125,000 homes annually. (Deepwater's Rhode Island project would be somewhat bigger with a capacity of 385 megawatts of electricity -- about three-quarters of the capacity of the natural-gas fired power plant at Dominion Energy's Manchester Street Station in Providence.)

The New Jersey project would cost about $1 billion, and would be financed privately.
It would be located southeast of Atlantic City, 16 miles off the New Jersey coast.

"At this distance," GSOE said in a statement, "the wind farm would be barely visible from shore, addressing one of the major concerns of beach communities."

The wind farm could begin generating energy in 2012 with the entire project operational in 2013.

A news release issued by the New Jersey Board of Public Utilities said the project would produce power at a cost of 4.3 cents per kilowatt-hour, which is substantially below current market prices for electricity. (Rhode Islanders currently pay 12.4 cents per kilowatt-hour.)

However, Janeen Lawlor, a spokeswoman for the board, said the BPU learned later that figure is not correct and was the product of a math error by the BPU staff. Lawlor said her office did not have the correct cost per kilowatt hour. She said the incorrect number was not used by the board during its evaluation process.

As part of the resolution of a dispute, National Grid must make payments next year totaling more than $50 million. And under the agreement, ratepayers will pick up the tab. Rhode Island customers could see an increase of 4.2 percent per month.

The deal reached between National Grid, a state agency that represents ratepayers, and its biggest electricity supplier, Constellation Energy of Baltimore, calls for National Grid to make payments to Constellation next year that total $50.2 million. And under the agreement, it is the ratepayers who will pay.

The Public Utilities Commission, which on Tuesday voted 3-0 to approve the agreement, will decide how to assess customers the $50.2 million. If it decides that all the money should be collected in one year, it would mean a rate increase of $3.95 a month, or 4.2 percent, for a typical customer that uses 500 kilowatt-hours of electricity each month.

Electricity rates are already at an all-time high. In July, National Grid increased electricity rates by 21.7 percent. A typical customer now pays $93.44 a month for electricity, according to the company.

National Grid said that although customers are facing another rate increase, they are far better off than they would be if the company lost the disputes in court. The company, and therefore its customers, could have been required to pay $300 million or more if Constellation won the pending lawsuits, said Ronald T. Gerwatowski, deputy general counsel for National Grid USA.

"The way we came out of this settlement is good news for customers, when you consider the potential liability that was hanging over our heads," he said in an interview this afternoon.

The developer selected by Governor Carcieri to build a $1.5 billion wind farm off the coast of Rhode Island is represented by a local attorney who served as Carceri's chief of staff for four years.

The attorney, Jeffrey Grybowski, is a partner with Hinckley, Allen & Snyder LLP and was hired by Deepwater Wind in May, said Chris Brown, chief executive officer of Deepwater.

He served as Carcieri's chief of staff between 2003 and 2007.

"He's an attorney for the firm," Brown said. "We used his understanding the law and the background of things like the [Coastal Resources Management Council], the permitting process -- really the legal aspects of the Rhode Island project."

"You really need a solid legal team," he added. "There's about 100 permits [needed] on the environmental side."

Brown, as well as a spokeswoman for Carcieri insisted that Grybowski's ties to the governor played no role in Deepwater's selection as the winning bidder.

"The evaluation process was handled completely by the evaluation team," said Amy Kempe, the spokeswoman. The team consisted of four state officials and a dean at the University of Rhode Island.

They were assisted by two outside consultants who were brought in for their expertise in engineering and energy, said Andrew Dzykewicz, the governor's chief energy adviser.

Kempe said the governor was informed that Grybowski was working with Deepwater at the time the team made its recommendation that Deepwater should get the contract.
"It was all above board, I can assure you of that," she said.

"What it comes down to," Dzykewicz said, "these guys clearly had the best proposal. Just because we have a guy that we know as part of the team doesn't mean we should disqualify them."

Read a previous story.

State officials have selected Deepwater Wind, a N.J.-based firm, to construct and finance a massive wind farm off the coast of Rhode Island.

The project, expected to cost about $1.5 billion, would be one of the largest development projects in the history of the state. The governor's office plans to announce the selection tomorrow.

The project, which has been proposed by Governor Carcieri, is expected to be about the same size and scope of the proposed Cape Wind project in Massachusetts.

The governor's office has said the state would choose the winning proposal based on the total cost to Rhode Island ratepayers, the qualifications and experience of the developer, and the number of jobs and amount of tax revenue the project would create.

The state would not finance the project, as had once been contemplated. The winning developer would have to finance the project privately. The state would "use its best efforts" to expedite the permitting process and assure a long-term contract for energy produced by the facility.

The "preferred site" for the wind farm is off the south and western shores of Block Island, but the governor's office said that others may be considered.

Along with Deep Water Wind, the companies that submitted bids were: Allco Renewable Energy Group Limited LLC, New York, N.Y.; Bluewater Wind LLC, Providence; DKRW Wind LLC, Houston; Fishermen's Energy of Rhode Island, Bristol; Great Eastern Wind LLC, Providence; and WindPowerpro.us, Woodbridge, N.J.

A panel of five people poured through the proposals: David Farmer, dean of the Graduate School of Oceanography at the University of Rhode Island; Andrew Dzykewicz, commissioner of the Rhode Island Office of Energy Resources; Thomas F. Ahern, administrator of the Division of Public Utilities and Carriers; Saul Kaplan, executive director of the Rhode Island Economic Development Corporation; and Christopher Long, policy analyst in the governor's office.

-- With Journal archival reports

Even before state regulators have considered a proposed 15.6 percent hike in electricity rates, National Grid now says it wants to increase rates even more.

National Grid told the state Public Utilities Commission today that the increasing price of crude oil and natural gas has forced it to revise its proposed rate increase to 21.7 percent.

The request is the largest single rate increase the company has ever sought, and would put rates at their highest level ever.

National Grid has asked the new rates to go into effect on July 15.

A typical customer, which National Grid defines as one who uses 500 kilowatt-hours of electricity each month, would pay a total of $93.44 a month, an increase of $16.67 a month from the current monthly bill of $76.77.

The revised proposal was necessitated by the continued rise in energy prices, the company said. Since its original rate hike request in mid-May, National Grid said that both natural gas and crude oil prices have increased more than 10 percent. Since November, when the current rates went into effect, both fuels have increased by over 60 percent, the company said.

The rate increase would add to the already strained budgets of families who are coping with record-high gasoline prices and rising food costs. In addition, National Grid in May proposed raising natural gas rates by 10 percent.

National Grid is Rhode Island’s dominant utility company, providing electricity service to 477,000 customers in 38 communities and natural gas to about 245,000 customers in 33 communities. The company filed its revised rate-increase proposal with the state PUC this afternoon.

The Public Utilities Commission will listen to comments on the revised rate request at a previously-scheduled public hearing at 9:30 a.m. on Tuesday at the PUC office, 89 Jefferson Blvd., in Warwick.

Have you decided not to make your traditional July 4th holiday trip this year because of high gasoline prices? Are you traveling closer to home? If you are going, are you packing for your trip today? Please contact The Journal's energy writer, Tim Barmann, at 401-277-7369 or tbarmann@projo.com.

The U.S. Department of Commerce today upheld a decision by Massachusetts regulators to deny approval for the liquefied natural gas terminal planned by Weaver's Cove Energy LLC in Fall River.

The decision is another blow for company, which has been battling widespread public opposition to the LNG plan, as well as series of unfavorable decisions by state regulators and federal agencies.

Today's decision was issued by the Commerce Department's National Oceanic and Atmospheric Admistration.

Weaver's Cove had asked the department to overturn a decision by the Massachusetts Office of Coastal Zone Management that determined that the project was not consistent with the state's coastal management plan.

>> Continue reading: Feds uphold Mass. denial of Fall River LNG terminal

Governor Carcieri has vetoed a key renewable energy bill passed by the General Assembly that was designed to foster private investment in major renewable energy projects and shift the state away from its reliance on traditional fossil fuels.

The bill would require National Grid to enter into "commercially reasonable" long-term contracts with renewable-energy developers to purchase their electricity. That requirement would give assurance to prospective developers that there would be a buyer for the electricity produced by the project.

"It is with much regret that I find it necessary to veto this legislation," the governor said in a veto statement issued this morning. "Unfortunately, I believe the legislation before me today fails to balance our desire to invest in renewable energy with the realities that ratepayers currently endure."

The governor gave three reasons for his veto. He said he took issue with a provision in the bill that would give National Grid a bonus payment of 3 percent of the renewable energy contracts it entered into, once the project began operations. Electricity customers would have paid for the bonus.

National Grid has said that if it enters into these long-term renewable energy contracts, the cost to borrow money throughout the company would have been more expensive. The payment would have offset those additional costs.

According to calculations by The Providence Journal, National Grid would receive at least $2.8 million a year if it could purchase the required amount of power at a rate of 11.5 cents per kilowatt hour. (That is the rate National Grid is seeking to charge for electricity as of July 1.)

But the governor, echoing arguments made by some legislators, said that any bonus to enter into long-term contracts was "unnecessary and unearned."

Secondly, the governor said another flaw in the bill was that it did not require National Grid to enter into renewable energy contracts from developers who are building a project within Rhode Island. The bill required that the project provide some economic benefit to Rhode Island, but did not require it to be located here.

While it may be true that a renewable energy project located in Massachusetts, Maine or Canada could provide some economic benefit to Rhode Island, projects based here "deserve greater weight."

Lastly, the governor said the most troubling provision was a requirement that 5 megawatts of the renewable energy contracts must come from a Rhode Island-bases solar energy project.

"While it's encouraging to see a Rhode Island project get priority, it's unfortunate that the General Assembly picked perhaps the costliest renewable technology and decided to give it, and only it, preferential treatment."

He said that a recent study by the University of Rhode Island Partnership for Energy report found that the state is not well-positioned for large-scale solar power.

"I'm confident that working with legislative leaders, environmentalists, energy producers and ratepayers we can come up with a better way to support investment in renewable energy projects in Rhode Island," Carcieri said.

The Rhode Island House of Representatives this afternoon is debating a major energy bill that supporters say will help move the state away from its dependence on electricity generated by fossil fuels.

The Senate passed the same bill yesterday.

If passed, the bill would require National Grid to enter into “commercially reasonable” long-term contracts with renewable-energy developers to purchase their electricity. That requirement would give assurance to prospective developers that there would be a buyer for the electricity produced by the project. Such assurance, the developers have said, is needed to borrow money to build renewable energy projects.

The utility company would have to enter into contracts that total 90 megawatts of average generating capacity. That total is arrived at after accounting for the fact that the wind turbines will only produce electricity some of the time (when the wind blows faster than a certain speed) and the fact that the solar panels won't produce much power when it's cloudy.

Here is what that 90 megawatts really means and how it relates to a typical household's energy consumption:

First, one needs to figure out how much power that is, expressed in the number of kilowatt-hours. 90 megawatts x 8,760 hours in a year = 788,400 megawatt-hours, or 788.4 million kilowatt-hours over the course of one year.

National Grid supplies Rhode Island with about 6.6 billion kilowatt-hours of electricity a year.

So that means that 788,400 megawatt-hours of renewable energy would represent about 12 percent of all electricity consumed in the state.

How many homes would that power? If the average home uses 500 kilowatt-hours per month, that’s 6,000 kwh per year. 788,400,000 kwh / 6,000 kwh = 131,400 homes.

Ronald Gerwatowksi, vice president of distribution regulatory services for National Grid, confirmed the calculations but cautioned that other variables should be taken into account.

First, he said, it's likely that some of the renewable energy projects-- with which National Grid contracts -- may not be built, "due to siting and other project development difficulties."

"Thus, signing contracts to that level is not likely to result in as many megawatt-hours as you assume in the analysis," Gerwatowksi said. "It will be something less."

Secondly, he said the legislation relies on rules set by ISO New England that estimate the actual amount of electricity a renewable energy project would produce. He said those rules may be overly optimistic.

"For that reason, as well, it is hard to be certain about how many megawatt-hours actually will be produced," he said.

-- Journal staff writer Timothy C. Barmann

NEWPORT – Naval Station Newport plans to spend about $111 million on new buildings and infrastructure improvements over the next two years, largely as a result of the Base Realignment and Closure project (known as BRAC) that shifts several Navy operations to Newport.

The improvements to the 1,503-acre base are needed to handle the expected influx in the next three years of an additional 6,800 Navy personnel, most of will come to Newport for training, said Capt. Michel Poirier, commander of Naval Station Newport. That represents a 74 percent increase from the current level.

Those investments are on top of $46.3 million in contracts already awarded over the past two years.

Poirier discussed the changes and investments planned for the Navy base yesterday at a luncheon hosted by the Newport County Chamber of Commerce. Among the 200 people in attendance was Governor Carcieri, Lt. Gov. Elizabeth Roberts, General Treasurer Frank Caprio and Senate Majority Leader M. Teresa Paiva Weed, as well as Aquidneck Island business owners, town officials and real estate developers.

-- Journal staff writer Timothy C. Barmann

>> Continue reading: Navy plans investments at Newport Naval Station

The cost of buying heating oil continued its upward spiral today with the average price rising to $3.429 a gallon in Rhode Island, another record.

The average price, which is based on a survey of local dealers by the State Office of Energy Resources, has risen 31 percent over the past 19 weeks.

The retail cost of a gallon of heating oil today is 54 percent higher than the retail cost of the equivalent amount of natural gas at the current rate charged by National Grid, the largest spread in at least six years.

The price of heating oil had been tracking closely to natural gas for several years but became more expensive in the 2004-2005 heating season by about 5 percent, according to calculations by The Journal. The following year, oil was about 6 percent more expensive, followed by 10 percent more expensive in the 2006-2007 heating season.

If the current price persists, it will cost $2,204 to heat a home this winter with 666 gallons of oil, compared to $1,485 for the same amount of energy using natural gas – a 48 percent increase.

The price of gasoline per gallon also went up today, 3 cents, to an average of $3.139 for unleaded.