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.