Article 18: Another Insider “Deepwater” Scam in the Making? (Corrected)


Despite disturbing new revelations and renewed public criticism about insider legislative grants, cronyism appears to be alive and well at the Rhode Island State House. And once again, Ocean State families and businesses would be asked to foot the bill.

In the budget that got voted out of the Finance Committee early Wednesday morning, alert observers spotted and brought to the attention of the RI Center for Freedom and Prosperity as well as the Ocean State Current on Friday an extensive revision to Article 18.

They are correct to loudly ring warning bells about it. If it stays in, state electric ratepayers are in for even higher electric rates than they currently pay.

Article 18 would shift certain costs of connecting a renewable energy project (wind turbine or solar power array, for example) into the electric grid from the developer to the ratepayer by overruling findings and a decision by the PUC. Remember when that happened, as it never should have, with Deepwater Wind?

Now, we potentially have a Deepwater Wind redux in the making with these last minute revisions to budget Article 18. This attempt to move the costs of connecting renewable energy projects to the grid would be a significant and unprecedented shift, as National Grid noted yesterday in the kick-butt ProJo article by Kathy Gregg and Alex Kuffner.

“Approval of this measure would make Rhode Island the only state in the nation where developers would be subsidized by ratepayers for construction of the link between their for-profit generation facilities and the electric transmission or distribution system,” the company said in a statement.

In other words, if the revisions to Article 18 or any stand-alone bill containing this language pass into law, the RI General Assembly would be forcing rate hikes on to Rhode Island ratepayers via exactly the WRONG kind of national ground-breaking policy. Worse, if you go to the bottom of Article 18, you will see that ratepayers would be picking up interconnection costs RETROACTIVELY back to January 1, 2015, potentially creating an instant, multi-million dollar invoice for ratepayers right out of the box. (Note to the developer and certain interested legislators: was this section deliberately included as a throw-away so you could say, oh, okay, we’ll compromise and take this section out but the rest stays? Forget it, we’re not falling for it. The whole thing has to go.)

One of the big problems here is that a renewable energy generating project, wherever it might be – like in an isolated corner of the state where the land is cheaper to purchase or rent – often requires an expensive upgrade to the grid infrastructure; miles of lines, for example, that would never have been needed/warranted by the existing (low) electric load. So, effectively, the renewable energy project would force ratepayers to fund otherwise unneeded upgrades to the grid.

So why is this in the works? Who stands to benefit? Good question. The answer is a company called Wind Energy Development (WED).

In January, the PUC sent a letter to the House Corporations Committee recommending against House Bill H7006. In it, the PUC referenced both the best interest of all ratepayers and a dispute between National Grid and “Wind Energy Development”. (Go here to see the lengthy PUC docket pertaining to WED.)

H7006 (corrected) never went anywhere passed the House but got held up in the Senate. But identical language in it has popped up again as the last minute additions/revisions to Budget Article 18. So, clearly, the revisions to Article 18 were made specifically with Wind Energy Development in mind.

Further, its principle, Mark DePasquale, has stated that it is the mission of WED to become the “lead developer of wind energy for Rhode Island”.

But you’re not going to get far in the wind “industry” without government mandates, involuntary ratepayer subsidies and even, if you can swing it, a significant shifting of costs. WED’s lobbying and campaign contribution activity on Smith Hill further confirm that they have been seeking to implement some sort of significant policy. A search on the RI Secretary of State’s lobbyist page shows that WED has steadily ramped up its employment of and spending on legislative lobbyists from one lobbyist (firm) in 2011 to three lobbyists in the current legislative session. Additionally, Mark DePasquale, principle of WED, and other DePasquales, have maxed out their campaign contributions to Gina Raimondo, Nicholas Mattiello, and John DeSimone from 2014 to 2016.

As of May, 2015, WED had a dozen renewable energy projects either underway or planned. If the company could fob the interconnection costs of some or all of those projects onto National Grid ratepayers, it would be a significant financial boon to them. The revisions to Article 18 would accomplish this for WED, to the detriment of all ratepayers.

In other words, we are witnessing in real time how a large government program with purported good intentions can quickly morph into a scheme to enrich a connected insider at the expense of everyone else.

The RI Center for Freedom and Prosperity (disclosure: I am their Communications Director) has just released a report showing that the high costs of increasing Rhode Island’s renewable energy sources, as state officials are moving to do, are a horrible value BY THE STANDARD SET BY THE EPA. For this reason, the Center

… strongly recommends that lawmakers reject all proposed new energy mandates in 2016 and, instead, repeal those that are currently written into law.

Asked about the implications of Article 18, the Center’s CEO Mike Stenhouse commented, “The revisions to Article 18 would add a huge, wholly inappropriate element of cronyism to what our report demonstrates is already a very low-impact, inefficient policy direction. Wind Energy Development has become the poster child for how big government projects – renewable energy, affordable housing – too often end up profiting insiders rather than benefiting the public. This revelation is perfectly timed to underscore our call for all renewable energy mandates to be rolled back.”

Speaker Mattiello said in yesterday’s ProJo that there will be amendments to this article. Excellent, as long as by “amendment”, he means removal of all of the new language that would needlessly increase everyone’s electric bills. Rhode Island ratepayers are very much looking to him to bring a wiser, cooler head to this matter.

  • Monique Chartier

    There’s gold in them thar hill … er, turbines!

  • Mike678

    Perhaps National Grid and the GA can allow choice to the people of RI. Let’s have two programs: Some can choose to pay the green energy rate. Others can opt out and pay the cheaper natural gas rate. After all, many progressives always talk about being willing to pay more. Let’s give them a chance to prove it.

    • Guest

      Smith Hill politicians will only realize what they are doing wrong with targeted legislation “Deepwater Wind insider deal” and “Article 18 for Wind Energy Development (WED)” when the United States Navy moves the U.S. Naval War College (NWC) and Naval Undersea Warfare Command (NUWC) out of Newport, RI due to high cost of doing business like it did with 6th fleet and Quonset Point Naval Air Station. New England States have highest cost
      of doing business and are located of end of supply lines.

      Once they go so goes all the support companies in RI and that would devastate the economy of RI but only the politicians, special
      interests and their lobbyists would be the blame for causing the electric rates to raise to the highest national level far surpassing any state in the nation that continues to burn imported oil (Hawaii) and that would help state of Hawaii to bring in business not having that albatross (highest electric rates in nation) hanging around its neck.

      U.S. Chief of Naval Operations has written enforceable mandates
      that all Navy operations reduce its electrical operations costs by 2020, Department of the Navy (DON) will produce at least 50% of shore based energy requirements from alternative sources; 50% of DON installations will be net-zero. By 50% by 2020, 50% of total DON energy consumption will come from alternative sources. If the
      shore facilities cannot accomplish energy consumption goals then they will be moved or consolidated under Base Realignment and Consolidation (BRAC) where they can attain required energy efficiency.

      NWC and NUWC, Newport, RI are both behind the eight ball with Block Island alternate energy demonstration project “Deepwater Wind insider deal” which forces all RI ratepayers (except Block Island) to pay higher state and municipal taxes due to offshore wind farm “alternating electrical energy” being piped directly to RI mainland; mixed in with major electrical trunk line fed by natural gas and other electrical “baseline energy” producing resources to be smoothed out and blended into “baseline electrical energy” which is then piped out to Block Island legacy electric grid. Once
      Deepwater Wind comes online there will be no distinction between electrical power resources. RI is the only state in nation where electrical and tax rates are increasing with inclusion of alternate green renewable energy.

      National Grid published study estimated collectively 38 RI municipalities and State of RI will use $250,000.00 in electricity at higher electric rate 1st year of Deepwater Wind farm operation thus causing tax rates to increase. Every year thereafter the Cost of Living clause will cause the $250,000.00 to raise 3.5% for 20 years totaling over $7,000,000.00 in extra taxes.

      Each business residing in RI will have to raise cost of goods and services due to higher taxes and higher cost of electricity and each
      resident who pays their electrical utility bills will need to pay higher taxes, higher cost of electricity and higher cost of goods and services from business. Each new tourist to state of RI will have to pay higher prices for hotels, foods, goods and services and rental cars. It will be cheaper to stay out of RI and vacation or weekend party elsewhere!

      It does not bode well for the citizens and businesses residing in RI with General Assembly willing to tack on “Article 18 for Wind
      Energy Development (WED)” which will further drive up electric rates. RI economy is already on the cusps of falling back into recession and losing more state-wide residents (to where RI will lose representation in Washington, DC) and businesses along with NWC and NUWC.

    • Lance Wilson

      Guest – RI is the only state in nation where electrical and tax rates are increasing with inclusion of alternate green renewable energy.

      Do you know if Vermont is in the same situation? The state is going nuts (maybe now that the current corrupt Governor and Speaker with ties to the renewable energy crowd are leaving) and making a mess with its goals about renewable energy. To make their renewable goals, you’ll have to start banning personal vehicles. Large sections of the Green Mountains stripped to make way for turbines.

      It seems to me that state is a case study in what to avoid..

      • Guest

        @Lance Wilson,

        I am not privy to the politics of State of Vermont (Governor
        and Speaker) although I did own a vacation home on Okemo Mountain in Ludlow, VT. I know in 2014 the City of Burlington, VT, 42,000 census population, Burlington
        Electric Department started to purchase electric power from Washington Electric Co-operative, 11,000 customers, the city crossed the threshold as being the first major city in North America to become 100% powered by alternate renewable energy sources such as wind, water, photovoltaic, and biomass.

        It’s part of a broader movement that includes a statewide
        goal of getting 90 percent of Vermont’s energy from renewable resources by 2050, including electricity, heating, and transportation. Across the state, Vermonters are urging their electric utilities to provide them with renewable sources of power, and the utilities are listening. The last time City of Burlington, VT had an electric rate increase was 2009.

        State of Maine has set goals where all construction of
        renewable energy projects will happen in state built by Maine residents. Currently there is a company harnessing rivers and ocean tidal flows to produce alternate renewable electric energy in Maine, South America and Alaska and the most promising project is the University of Maine with 100 year life-span floating 6 MW wind turbines that produce electricity cheaper than 10 cents per kWh keeping within the U.S. Department of Energy guidelines for federal tax
        credits and over 10 cents there are no tax credits. RI Deepwater Wind Block Island offshore windfarm with outdated construction techniques is 24.9 cents per kWh.

        The state of Hawaii is the first state in the nation to
        declare its state-wide energy independence in writing will happen year 2045. The whole state is expected to change over to renewable energy from wind, water, biomass, bio-gasification, photovoltaic, ocean thermal energy conversion, geothermal, algal biofuels with no offshore wind involved due to high cost. Currently Hawaii is 2nd behind California in registered electric vehicles and is testing hydrogen fuel cell vehicles with state–wide hydrogen fuel and electric charger distribution infrastructures. Electric rated have constantly reduced as new renewable systems have come on line. In Hawaii they
        have hidden the windfarms from view and 2045 Hawaii expects to reduce imported oil by 50% due to older vehicles on the roads.

        There are currently two renewable energy systems in the
        world that work and make baseline stable electric power in commercial quantities just like the electric power ompanies. The first is an Australian undersea powerbuoy that creates pressure to turn an electric generator and the second is an Hawaiian ocean thermal energy conversion power plant that uses warm surface ocean water to heat a liquid to steam to turn an electric generator producing baseline
        electric power and cold subsea water to condense to steam back to liquid starting the cycle all over again.

        • OceanStateCurrent


      • Mike678

        Not to question, but do you have a source to back that assertion? Because a quick search shows electric rates going up in many NE states–in fact, NE has the highest rates overall (Hi is #1).

        One reason rates are not increasing even more is the lower price of natural gas. Less effect on RI as the GA won’t allow additional pipelines.

      • Raymond Carter

        Well to be fair Vermont did a GREAT job implementing single-payer health care.

        • Lance Wilson

          @disqus_LE9XRwIBGJ:disqus – so true! But remember they brought in Steve Constantino to give them the RI way on efficiency through state control!

          Guest – I thought the subsidized energy credits were keeping rates flat; I was under the impression there was a fight that homeowners using net metering would be penalized if they didn’t give their REC back to the utility companies. There is a big fuss over giving more wind siting control to locals due to the increasing proliferation of turbines.