A renewable energy developer says Gov. Daniel J. McKee’s veto of legislation that would have changed the process and charges to interconnect solar projects with the electric grid may endanger the viability of future renewable energy development in Rhode Island.
McKee vetoed the bill on July 6, saying the cost of transmission upgrades needed to connect large-scale renewable energy projects to the grid would have been shifted from developers to utility ratepayers.
But Cranston-based Green Development LLC, which has built or proposed numerous wind and solar projects in Rhode Island, argues that the legislation has been mischaracterized because of misinformation spread by National Grid, the region’s dominant utility company.
A spokesman for Green Development, which is owned by founder Mark DePasquale, said the veto leaves the door open for power companies such as National Grid to freely impose hidden charges on developers while also passing costs to ratepayers.
“The interconnection situation in the state is probably one of the biggest hindrances to renewable energy development in Rhode Island,” said spokesman William Fisher.
National Grid spokesman Ted Kresse said the legislation would have had a significant impact on ratepayers, shifting much of the costs of interconnection – which, by law, have been covered by project developers – onto National Grid customers.
“In addition to the high costs of upgrading the distribution network to handle the significant loads these projects entail, it would also include the costs of the needed transmission studies, which can range anywhere from $10,000 to an excess of more than $100,000 depending on the scope,” Kresse said. “It would also shift tens of millions of dollars of transmission system modification costs caused by the developers of large solar projects to Rhode Island ratepayers.”
General Assembly leaders said they have not decided whether they’ll ask lawmakers to convene for a vote to override McKee’s veto.
But the contentiousness over the legislation highlights how developers, utilities and state regulators are wrestling with how to pay for the increasing costs of connecting renewable energy projects to the grid, particularly as Rhode Island officials try to meet the goal of powering the state with 100% renewable energy by 2030.
Green Development said the vetoed legislation would have required utility companies such as National Grid to properly account and charge for their interconnection studies, providing costs within 90 days, and the bill would have established an independent ombudsman to oversee the power company's interconnection practices.
Hannah Morini, Green Development’s director of business development, said as it stands now, the utility company can change interconnection charges after project work has begun, leading to delays and added costs.
“Last summer we were waiting to get the contracts to interconnect a large solar project in North Smithfield,” she said. “[National Grid] gave us the contracts for the work and included in it was a $500,000-a-year-in-perpetuity charge to maintain the transmission system on this project.”
Morini said construction had commenced on the project, and if they were made aware of the charge prior to installation, different decisions might have been made.
“Right now, there is no transparency,” Fisher said.
Jeffery Wright, president of the Block Island Utility District, agrees.
The Block Island Utility District is suing National Grid over the costs associated with the power company’s installation of a substation as part of the Block Island Wind Farm interconnection. National Grid estimated the substation would cost $500,000, but later notified the district that the cost was $1.8 million, which has been passed along to the island’s ratepayers.
Wright said the utility district is on the hook for $350,000 annually for the life of the substation. The lawsuit is expected to be heard by the R.I. Supreme Court in the fall.
Wright believes that developers should foot interconnection costs, but those charges should be reasonable.
