Press Release: 07/16/2010
Contact:  Maggi Rogers (401)728-5555, Henry Shelton(401)728-5555

The George Wiley Center, Tea Party enthusiasts, the RI Attorney General, The Ocean State Policy Research Institute, and the RI Public Utilities Commission, groups not often aligned, are solidly opposed to the proposed Deepwater wind project, being billed as a test of the efficacy of a larger wind farm, off of Block Island.

After a thorough review of the proposed project, the three-member PUC concluded unanimously that the Deepwater wind project was a bad deal for Rhode Island consumers. The commissioners’ most basic concern was the project’s cost trajectory which would start at 24.4 cents per kwh -- 2.65 times the current rate -- and increase by 3.5% per year for each of the next 20 years, reaching at that time 46.9 cents.

The George Wiley Center supports the PUC’s decision to reject the Deepwater initiative. Our work with hundreds of persons who struggle to pay their utility bills tells us that the cost of Deepwater-generated electricity will further strain the budgets of working families and the poor. The Deepwater project’s risk should fall on the investors and managers since, as they themselves argue, risk is the basis for their handsome return. Deepwater’s Board of Managers, it should be noted, includes former officials from BP, Enron, and J.P. Morgan Partners.

Seemingly unimpressed with the PUC’s concern about the extraordinary cost projections for Deepwater- generated energy, Governor Carcieri and the RI General Assembly contrived a way to force the PUC to reconsider the proposal. Senate Bill 2819 SUB A, passed in the waning legislative session, mandates that the PUC broaden its criteria for evaluating the Deepwater project. The PUC must now assess the project’s job-creation potential and its impact on the environment.

On the specific merits of the Governor’s ploy, Attorney General Patrick Lynch is correct in saying that the Governor is violating the independence of the PUC by imposing post hoc criteria for their deliberations. While the concept of the PUC’s broadening its criteria for reviewing utility proposals is a good one, those criteria should be transparent and should be established beforehand. Inasmuch as the PUC commissioners have a dual responsibility to protect the interests of the utility companies and the public, any review process should assess the full impact of PUC decisions on public health, safety, and economic development.

If the PUC applied a broad set of criteria to their deliberations on utility proposals, and if they did so empirically, the commissioners could evaluate if it is likely that the Deepwater project would create jobs. On this point, it has been noted that it would be a reach to expect Deepwater to increase net job growth after $696 million dollars was skimmed from the RI economy to purchase Deepwater energy over the project’s contract period.

As for the matters of public safety and health, these variables should be included in any assessment criteria because of the harm caused by utility rate hikes. As an increasing number of Rhode Islanders fail to keep up with their sky-rocketing gas and electricity bills, more and more of them have lost their utility service. In recent years, an average of 30,000 RI households has had a utility service terminated. These terminations create undeniable safety and health risks – readers may be aware that in recent weeks a woman in New Hampshire died after National Grid terminated her electric service for non-payment. Kay Phaneuf succumbed after electricity that powered her breathing-assistance machine was cut off. In RI, we assist many persons with health issues who lose gas or electricity service when they fall behind on their utility bills. For diabetics who must keep their insulin cold, asthmatic children, and persons with heart disease, utility service can be a life and death matter.

The General Assembly members who voted to force the PUC to re-consider the Deepwater proposal had an opportunity to apply a “broad criteria” standard to the utility shut-off crisis in each of the last seven years. Legislators could have considered health and safety factors to help thousands of Rhode Islanders who need relief from crushing utility bills. Showing no inclination to pass consumer-friendly legislation, the leadership took a pass on the Affordable Rate Utility Bill (H7816). That legislation would have capped utility costs for Rhode Islanders who qualify for federal heating assistance at no more than 8% of household income. Passage of H7816 would have reduced shut-offs, with their health and safety risks, and put more disposable income into the hands of qualifying consumers. That money could have been spent to purchase food and other necessities, contributing to Rhode Island’s badly-needed economic expansion.

In response to concerns that other utility customers would have to subsidize those households that qualify for the percentage of income payment plan provided by H7816, it has been repeatedly noted that consumers have long been subsidizing National Grid for “uncollectable” revenue when cash-strapped customers cannot pay their utility bills. Under H-7816, all consumers would have to pay their utility bills – including those who are elderly, disabled, and low-income. It also guarantees that plan participants in good standing will not go without essential power, schoolchildren will have lights by which to read, and very poor people will not have to forego food or medicine. In this regard, H7816 differs substantially from both decoupling and Deepwater, which will raise electric rates and increase the prospect of even more utility shutoffs, health problems, and public safety risks.

As if the Deepwater Wind burden was not enough to dump on consumers, the Governor and the state legislature also accepted National Grid’s overt money-grab by passing decoupling legislation (H8082 SUB A). Decoupling essentially absolves National Grid’s stockholders of risk and rewards the company for any conservation by customers – whether or not that conservation is in any way due to National Grid’s improvements in policy or infrastructure. This will further cripple consumers’ ability to keep current with their utility bills. It seems, in fact, a veiled end-run around the refusal of the PUC to approve Grid’s 13% rate increase request last fall.

The PUC will reassess the merits of the Deepwater proposal at two public hearings on July 22, at 10am on Block Island and at 6:00pm at the PUC offices, 89 Jefferson Blvd, Warwick. Interested utility consumers should attend these hearings and encourage PUC commissioners to reject the Deepwater proposal once again. With public support the commissioners can resist anti-consumer pressure and, once again, vote “no.”