WARWICK – National Grid has filed a new contract to purchase electricity from a planned wind farm off the coast of Block Island developed by Deepwater Wind.
Under the contract filed Wednesday with the R.I. Public Utilities Commission, National Grid would purchase electricity at 23.57 cents per kilowatt-hour in 2012 (the project is expected to come online in the fall of that year). As with the previous contract, the price of the electricity would increase 3.5 percent per year, meaning that the price would rise to 24.4 cents a kilowatt-hour in 2013, the same price proposed in a contract rejected by the PUC in March as being too expensive.
Under provisions in this contract, however, National Grid said any reductions in the cost of constructing or operating the $205.4 million facility would not be captured as profit by Deepwater but instead would be reflected in a lower electricity price.
The contract comes after the General Assembly passed legislation earlier this year ordering the PUC to take another look at the project after its initial rejection. The law directs the PUC to place an emphasis on the potential for economic development spurred by the creation of a wind farm and accompanying industry. It also sought to clarify how the commission would judge a “commercially reasonable rate.”
In a letter to the PUC, National Grid lawyer Ronald Gerwatowski said the company believed it met those requirements with its latest power-purchase agreement, or PPA for short.
“The company believes that the amended PPA promotes the important public policy goals articulated in Rhode Island General Laws Section 39-26.1-7,” he wrote. “It also contains terms and conditions that are ‘commercially reasonable’ for a small-scale offshore wind demonstration project, even though there may be other energy alternatives in the region that could produce electricity at lower cost.”
By law the PUC now has 45 days to hear the case. A spokesman said the commission is slated to hold its first meeting on the proposed contract on July 8 when it will accept formal requests from parties wishing to be a part of the case.
In the past, Deepwater has said time is critical, partly to take advantage of federal tax credits that expire at the end of 2012. If successful off Block Island, the New Jersey-based company wants to build a larger farm with about 100 turbines 15 miles off the mainland.
Gov. Donald L. Carcieri, a strong supporter of the wind farms, hailed the proposed contract in statement released late Wednesday afternoon.
“I commend Deepwater Wind and National Grid for acting quickly to move this project forward, assuring Rhode Island remains the leader in developing the nation’s first offshore wind project,” Carcieri said. “We have the opportunity to once again control our economic destiny, to lead the nation in the creation of a new industry, and to create hundreds, if not thousands, of good-paying jobs for Rhode Islanders.”
