PUC Decides RI Needs High Energy Prices

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The proposed power plant in Burrillville isn’t an issue on which I’ve done enough investigation to form a full opinion, although we should generally be aware of the potential of environmental extremism and NIMBYism to combine in unhelpful ways.

Even putting all that aside, however, the rationale of the Public Utilities Commission (PUC) for rejecting the proposal, as Alex Kuffner reports it in the Providence Journal, should be cause for pause:

The board members cited declining wholesale energy prices that, experts say, show that the region is not experiencing a shortage of supply. Moreover, they pointed to evidence that other energy sources, including offshore wind, will help to satisfy New England’s future power needs. In short, Invenergy failed to demonstrate that the 1,000-megawatt Clear River Energy Center is necessary.

Need was one of three criteria that under state law Invenergy had to prove to the board. The other two were: that its cost would be justified, and that it would not cause unacceptable harm to the environment and would enhance the socio-economic fabric of the state.

How does one determine the need for something like this?  The board, following opponents of the project, found that increasing energy efficiency plus increases in solar and wind power were enough to compensate for regional production decreases, such as came with closure of the Brayton Point coal plant.

But the only mention of the cost of energy in the region is that wholesale energy prices are going down.  Downward trends are nice, but they aren’t the whole story.  According to the U.S. Energy Information Administration, Rhode Island has the 5th highest average retail price of energy in the country.  First and second are Alaska and Hawaii which have unique challenges.  Third and fourth are Connecticut and Massachusetts, which means that Southern New England has the highest electricity prices in the contiguous United States.

The difference isn’t minimal.  Electricity in Rhode Island was 16.42 cents per kilowatt hour, while the U.S. average was 10.48.  That means Rhode Islanders are paying almost 60% more for electricity than the national average.

Moreover, the following chart makes it clear that the Northeast has a problem.  Take out the top 11 states — that is, the Northeast, California, and the non-contiguous states — and the range of prices is only about four cents.

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The Burrillville plant may or may not have been a worthwhile project, but if the high energy prices in our state and region don’t illustrate a need for more energy, I don’t know what would.  Imagine how much more vibrant our economy would be if energy were 36% lower, at the national average.  A more vibrant economy would mean less pressure on government budgets, more wealth for working Rhode Islanders, and more opportunity for young adults and families.

According to Kuffner, the PUC “scheduled three days of deliberations starting Thursday morning, but it needed less than one.”  State regulators shouldn’t brush aside these trade offs as inconsequential, and the fact that they did should disturb us all because it means they’re making tremendous gambles with our future.



  • Joe Smith

    I would guess the issue is more than just supply (at the wholesale level).

    https://www.eia.gov/electricity/monthly/current_month/epm.pdf

    The tables at least at first glance would also suggest New England states versus other regions have a different energy fuel source mix so the NE price might vary more with natural gas prices while other areas with coal for example (since NE has almost zero coal use). The liquid petroleum prices show great variability over the last decade with some of the cheapest prices in 16 through early 18, hence distorting wholesale prices unless a longer time period was used.

    Second, retail supply (and hence prices) have the additional transmission capacity factor so whether you can grow wholesale supply is a bit of a fool’s errand if you can’t either increase transmission capacity (or limit retail demand growth). Transmission issues also include the supply flow for the plants’ fuel sources, which I suspect for gas will remain a problem given opposition to pipeline and LNG expansion.

    Third, and I can only guess on this..but I suspect New England has more onerous regulatory cost of doing business (and maybe more renewable mandates despite their inefficiency at least historically and thus requirement for subsidization through higher retail prices).

    A new gas fueled power plant really doesn’t solve these issues.

    • Justin Katz

      Those are all reasonable points, although I don’t think one can reasonable pick apart a market in its component pieces as cleanly as you’re doing. In any event, the finding that RI doesn’t need more energy as a general proposition is objectionable on its own.

      • Makaha Ken

        According the latest U.S. Department of Energy (DOE), Energy IInformation Administration (EIA)  March 2019 50 state electric rates: https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a

        ranked Hawaii highest electric rates in nation at 33.99 cents per kWh due to still burning imported oil in 70% of electric generator power plants. However, Hawaii is on the road to 100% renewable clean alternate energy by year 2045 which will significantly reduce electric rates in state to near mainland average electric rates. Hawaii is using a blended approach to integrating all its renewable systems rejecting and not utilizing offshore wind farms.

        EIA ranked Rhode Island as second highest electric rates in nation at 23.14 cents per kWh due in part to the scam by Deepwater Wind and D.E. Shaw Wall street investors were allowed to set purchase price agreement (PPA) with National Grid at 24.4 cents per kWh with a 20 year compounding 3.5% annual COLA (currently at approximately 26 cents per kWh) over 20 years ending near 50 cents per kWh. This is artificially keeping Rhode Island’s electric rates high and causing state, cities and towns to raise taxes each year offsetting  3.5% annual COLA increase in electric rates.

        One major benefit that occurred from the RI Block Island offshore wind farm scam was U.S. DOE indicated no further tax credits would go to any offshore wind farm that had a PPA above 10 cents per kWh

        Alaska, Connecticut, Massachusetts, New Hampshire, California, Vermont, New York and New Jersey in this order comprise the top 10 states with highest electric rates in nation.

        Deepwater Wind was purchased by Ørsted Energy Company of Denmark one of the largest wind farm developers in Denmark. Ørsted, the developer of the 700-megawatt Revolution Wind project will supply 300 MW to Massachusetts and 400 MW to Rhode Island.

        Rhode Island governor, general assembly and PUC regulators must be careful not to place all their eggs in one basket less all the lights will go out.

        There are approximately 71 electric companies currently located within the 6 New England states.

  • Bob Greyson

    You would think a private company that has to make a profit or go out of business would have a good idea about whether there will be a market for it’s product if they are going to spend a billion dollars on the plant. Any chance the opponents will step up and pay the entire cost of the solar/wind replacements?? And volunteer for blackouts if they State agency’s projections of need are wrong??

  • ShannonEntropy

    Eliminating the power capacity of the Brayton Point Power Station — and then destroying / imploding the infrastructure there — will go down as prolly the second biggest New England Environmental mistake *ever*

    [ Not finishing the development of Rhody’s Big River Reservoir will always be # 1 … at least in my book ]

    No need to cite references… we will continue to have WAY inadequate natural gas infrastrucure and thus the need to import high cost electricity into our grid that our “green” wind & solar will never come close to competing with… thus ensuring we have the highest energy costs in the nation for generations to come

    Well at least I won’t have to pay for Sports in Warwick Schools anymore… that should help

    What will YOU and your kids & grandkids do to help pay the coming sky-rocketing Nat’l Grid bills ??

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