March 14, 2010

A Bit of Hot Air

Justin Katz

This is the proposed subsidy that the General Assembly and Governor are foolishly forcing energy consumers to provide for wind power, unless the Public Utilities Commission objects:

Under the deal being reviewed, National Grid would pay 24.4 cents per kilowatt hour for power from the project starting in 2013. The price would increase by 3.5 percent a year. The utility currently pays 9.2 cents per kilowatt hour for power from natural gas-fired plants and the like.

We've essentially created a controlled market for wind energy that begins two-and-a-half times the going rate and increases about 15% per year regardless of market forces. During a massive recession, this is a wonderful example of the insanity that Rhode Island does so well.

"A lot of industries are looking to pull out of this region," Energy Management vice president Dennis Duffy said. "This is one new industry that is trying to get in."

Of course, Mr. Duffy doesn't speculate as to what other industries might try to get in the region with the same subsidized deal and guaranteed market. Rhode Islanders should remember Duffy's argument in a few years when there are even fewer jobs, fewer business, and a smaller taxbase and public infrastructure has switched from crumbling to dissipating for lack of resources.

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This is foolishness.

One of the critical elements of any non-fossil fuel substitute is that it must cost about the same for the consumer. So this alternative energy fails that test.

Posted by: Monique at March 14, 2010 9:50 AM

This foolishness frustrates me to no end. Has anyone picked up their electric bill to see we generate more power with Wood (1.1%) + Trash-to-Energy (1.1%) than Oil (2.2%). Even our current Hydro Power (4.2%) produces twice as much electric than oil.

This project is not about getting off oil, it is about guaranteed profits for a select few.

Obama's Trickle Up Poverty in full action. I bet a bunch of people will qualify for government subsidies when the rates get high enough.

The greedy ex-bankers & investors are going to fool (or payoff) the lawmakers to guarantee their 15% profit for the next twenty years. Plus they will get ratepayers to pony up 50Million for the cable to Block Island so they can add another 80 more windmills to their bottom line.

The state would be better off hiring another 50 state workers to twiddle their thumbs and keep our rates at 9 cents/kwh.

Posted by: dave at March 14, 2010 12:33 PM

What mystifies me is why the Governor would be supporting this extortion of the public. It goes against every principle of Republicanism and of good business.

Did he think about this for more than fifteen seconds?

Posted by: BobN at March 14, 2010 1:37 PM

I'm glad we not have over a million governors in RI.

Well, more like Fundamentalists.....than governors!

I suppose you need to be reminded of the vast Federal help and giveaways (MILLIONS of Acres, plus incredible per mile bonuses) - to built the transcontinental railroad.

Or, how about the big bad government being involved in the building out of this internet we are all using? They did so out of their budget, and for years have offered incentives, tax credits and other methods to help it grow.

Oh, how about the telegraph? This was created with virtually 100% federal subsidies.

Nuclear power? That darling of the right? Oh, it could not exist today without the government giving everything to the industry, from the original R&D, to lack of liability even today.

Don't make me laugh about all those Principles of Republicanism!

Now, if you honestly yelled and screamed about everything from GPS to lasers to the railroads to the nuke industry....and everything else good that the government has brought into existence with subsidies, then my apologies to you - you must be a purist.

But for those who found religion last year because they didn't like having an intelligent man in the white house - well, you have to read the conservative creed once again...
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

Or, in my words "Oh, thou Hypocrites".

Posted by: Stuart at March 14, 2010 4:53 PM


Grays Harbor Ocean Energy Company of Seattle, WA tried to build a 100 turbine offshore wind farm in the shallow waters in between Oahu and Molokai in the middle of Penguin Bank without notifying anyone in Hawaii first of their intentions. Hawaii found out only after the federal permit was about to be issued to Grays Harbor and required State of HI sign off.

Penguin Bank is the Hawaiian Islands Humpback Whale National Marine Sanctuary one of the world's most important humpback whale habitats.

When they finally gave a purchase price per KWH to Hawaii Electric Company (HECO), HECO responded that it was 10 times the amount it cost HECO to generate a KWH with current diesel generators.

Was HI upset? People here were livid not only because a mainland company tried subvert HI laws but also tried to desecrate the whale sanctuary and create visual blight with ocean towers which would be seen from Waikiki Beach!

Needless to say Grays Harbor Ocean Energy Company was told to start walking back to Seattle but we finally let them get on a plane to fly back.

In RI the $0.244 increased rate with the built-in 3.5% annual price adjustment is causing alarm to the state's largest commercial electric users. Already they have indicated to the RI PUC the additional cost is unsustainable. meaning they could move their business out of RI to a state where it is more tax and utility friendly. The universities and colleges will also take a hit meaning electric cost will be passed on to the students making out of state universities and colleges more financially favorable causing a brain drain in RI. The domino effect will be quite devastating to RI and it's economy just when it least can afford it.

Hawaii as a state has mandated that by 2030 it will reduce dependence of fossil fuels by 70% using various combinations of renewable energy. So far as each renewable small and large system has been added to the electric grid our electric rates have gone down not up as in RI.

Currently there are Ocean Power Technologies PowerBuoy® system (extending out of water 14 ft) riding up/down the waves generating electricity at $0.15/kwh purchase price.

Lockheed Martin is building two ocean thermo energy conversion (OTEC) (ocean water temperature differential drive power turbines) generator semi-submersible platforms. One will be 10 MW and the second will be 100 MW at $0.16/kwh purchase price. OTEC have a 98% 24/7 production rating and only require 2% renewable energy support to make them 100% self sufficient. The world's first commercial OTEC was developed in HI at the National Energy Laboratories Hawaii Authority. OTEC was invented in France in the 1800s.

HI is the first state in the nation to require all new home construct to include solar hot water heaters and HI as a state is being wired and infrastructure being put in place for electric vehicles and public charging stations powered by alternate energy.

HI has built the first 100% self sustaining hydrogen fuel station for car, trucks and buses and is now building a hydrogen fuel commercial park and is building a 100% self sustaining commercial electric power plant powered by algae converted to biodiesel.

HI is the only state in the nation that manufactures synthetic natural gas on a commercial scale.

Of course HI has solar, photovoltaic, hydrogen fuel, hydrogen fuel cell, wind, biomass, geothermal, hydropower, ocean wave and ocean thermal energy.

Posted by: Ken at March 14, 2010 5:44 PM

Look, Ken. I get your point about how wonderful Hawaii is. All I would argue is that if these innovations are good ideas economically they will get made and bought on their own merits without government confiscating money from the people to direct it to their supporters' projects.

Posted by: BobN at March 14, 2010 7:00 PM

blah blah
the free market works perfectly, government is bad, change is bad, obama is breaking us, we should bomb the middle east, social justice is a bad thing, compassion and empathy are bad things, women should be barefoot and pregnant, export the illegals, bring more jesus into the government, etc.

Did I cover most of it?

It's time some of you actually read something about what made this nation great. May I suggest reading "Nothing like it in the World" about the transcontinental railroad?

Or one of dozens of other history books about the great inventors and how the government helped them?

How about Robert Fulton and the steamboat? The government allowed him a monopoly (just like these wind farms) on many of the most important shipping routes.

I could go on for days, but my suggestion is for y'all to do some reading before you do your writing. Learning history and current events from conservative talking points is not a relevant education.

Posted by: Stuart at March 14, 2010 7:45 PM


You missed the point!

I am agreeing with Justin, Monique and you plus everyone else who thinks this Deepwater wind farm is a bad deal for the State of RI. They are selling snake oil! The numbers are not there and the regular consumers or rate payers are being asked to take it on the chin to be the first in the nation on the promise it will create 800 new jobs.

How many jobs will it cost the state with companies moving out of the state due to high energy costs ($0.244/kwh with annual 3.5% COLA rate adjustment). Don't forget if this rate stands RI has fixed the price of renewable energy for years to come in the state.

Like I said it was tried in HI and we said no to offshore wind farms because of cost!

I used the current examples of ocean technology being used in HI as examples of acceptable rates per kwh that are less intrusive, environmentally friendly and not creating visual blight on near ocean sites.

Posted by: Ken at March 14, 2010 9:09 PM

I still don't know what to make of Ken. At first I thought he was an internet troll using some bizarre new technique to derail every post by changing the subject from Rhode Island to Hawaii and throwing in lots of incredibly boring and irrelevant statistics about Hawaii. Now I think of him more like a "Rain Man" or "A Beautiful Mind"-type character who does it out of some rare psychological disorder.

Posted by: Dan at March 14, 2010 9:41 PM


You have me laughing till my sides hurt!
I was born, raised and lived in RI for 61 years maybe before you were even born! What remains of my family still lives in RI; father who turns 95 this year and still working for the state gratis as the longest appointed serving position in the nation of his individual title; still mind sharp as a needle and brother who is in 70s and yes, I had access due to my father over the years to both political party backrooms. He walked a very thin line pleasing both political parties and is highly respect in the state, other states, countries (selected as a UN mission representative of the USA) and Washington, DC.

I guess it's the years I was brought up on the gut busters, coffee milk, del's lemonade, stuffies, fried dough, Woonsocket dynamites, RI style clam chowder, family style chicken and RI politics that keeps me coming back to anything RI.

Yes I'm enjoying HI and in awe that a state could be so different and sane compared to RI and the venerable Uncle Vinnie on Federal Hill but I still miss little Rhody and 4 all-the-way!

My departed wife was from Newport and her uncle was the Republican mayor so between father and uncle-in-law life was good!

Maybe some of you miss interpret me but I try to draw parallels between RI and HI because they have the same political make up. Republican Governor and Democratic GA.

Anyways, Dan keep it up because you crack me up!

Posted by: Ken at March 14, 2010 10:36 PM

"if these innovations are good ideas economically they will get made and bought on their own merits without government confiscating money from the people to direct it to their supporters' projects."

Exactly. Or government mandating higher rates for the power produced by these "innovations", which is the same thing as directly confiscating the money.

Posted by: Monique at March 14, 2010 11:18 PM


Think about your statement and analogy made quoting BobN!

Here again BobN was extending his thoughts beyond the scope of the idea of my comments but you played right into his hands!

What you are advocating (as I read the comments ) is building on BobN's comment that it is alright in RI's case is for a Republican Governor to push for higher electric rates which the probability of driving business out the state due to higher utility costs; driving the unemployment rate higher in RI not to mention fallout from the domino affect on other rate payers all for the sake of one individual company saying RI will become a first in the nation leader in this green technology (actually the company benefits not the state) and the promise of 800 new jobs at what cost of jobs lost due to rate payers moving out of the state or the inability of ratepayers to adjust to the new higher rates is OK!.

Please correct my interpretation if you think I am wrong.

Posted by: Ken at March 15, 2010 12:30 AM

Ken, perhaps we both need to read each other more slowly. You wrote:

"What you are advocating (as I read the comments ) is building on BobN's comment that it is alright in RI's case is for a Republican Governor to push for higher electric rates..."

How on earth did you get the idea that I think it is alright to push for government-mandated subsidy of anything? My point was, always will be, exactly the opposite.

Posted by: BobN at March 15, 2010 9:00 AM

This is all just one piece of a puzzle.

The big picture is that Obama and his merry band of environmental luddites (formerly known as Marxists) despise free market capitalism and individual liberty, i.e., the founding concepts of our country.

Having failed in past decades to "transform" it via political revolution (SDS, Weather Underground, Communist Party USA), or external military means (Soviet bloc), they've been employing new tactics (socially eroding from within as promoted by Antonio Gramsci) and economically hobbling us through fiscal crack cocaine (entitlement expansion and massive debt) and environmental regulation (cap and trade; the global warming hoax). As some have observed, modern environmentalists are like watermelons -- green on the outside, red on the inside.

Just as his sycophants have recently advocated driving gas prices to $7 a gallon, driving up electric prices will also weaken (if not hobble) the economy ... and subsidizing electric costs for "low income" folks and/or favored businesses merely increases the government dependent class and so its reciprocal, government power.

They seek, by a thousand cuts, the death of the United States (in all but name).

Posted by: Ragin' Rhode Islander at March 15, 2010 4:46 PM


Have you thought deeply about this subject?

The "real cost" of coal is vastly higher than the cost you or I pay. The cost is the entire top ripped off square miles of mountains in KY and WV and elsewhere - scars so large they can be viewed from space and have changed the landscape forever. The water is also very polluted from the runoff, and the economies of these states are in shambles from resource extraction. The air pollution from coal burning causes everything from acid rain to vast increased in respiratory disease - please tell me, are you a mother? If your child has asthma, do you write that off as the cost for others to have cheap electricity?

The only reason that coal and nuclear electric are available at reasonable prices is that the costs are shifted elsewhere - or not paid at all as in the case of the environment and nuclear waste disposal. It all has to paid, in one way or another, sooner or later.

Again, I invite you to read the history of many of the most important forward steps of this country - from canals to railroads to steamboats to the telegraphy and more. All of them were heavily subsidized by the government because they provided a great benefit to the people. Yes, hopefully the economic picture gets brighter with more mass production, etc - but dismissing a technology because it is more expensive than the one you have now (which, again, is not really as cheap as it seems), is not a smart thing to do.

On the other hand, a good Nat Gas plant such as we have in RI is a very good source of energy are reasonable prices. But we need to continue to develop a mix of technology.

Posted by: Stuart at March 15, 2010 11:04 PM


I read you correctly and concure with your interpetation of your intent and meaning. I was questioning Monique on her statement based on your statement!

Posted by: Ken at March 16, 2010 2:57 AM

The initial cost is actually 25.1/kwh due to the 2.75% bribe built in for NG.

The cost of the power cables to connect to the mainland grid is not included. NG estimated just over 30 cents/kwh with that cost included - its not included hence 24.4 x 102.75% = 25.1 cents/kwh.

No mention of whether the cost of decommissioning and removal is included or whether insurance for such is included should Deepwater go bust. What happens in 26 years when the turbines reach their end of life cycle?

The cost at the end of 20 years will be 50 cents/kwh compared to 23.3 cents/kwh for a similar project in Delaware, Bluewater. A huge difference due to the lower initial rate and a 2.5% yearly increase instead of 3.5% here. Bluewater's costs also have the power cable cost and decommissioning included in that figure. Bluewater has an additional 2.5 cents/kwh in tax credits they have to then auction off for income. Even without that the price would be much less. 16.6 cents initially versus 25.1 cents and 27.35 cents versus 50 cents after 20 years.

Lastly the estimate of 800 jobs is over blown beyond belief. Those may be short term subcontractor jobs that will last maybe 4 years. The facts are that these require very little maintenance so its likely that a few dozen maintenance jobs would be supported.

There are so many things wrong with this that there is no way it should be approved from the no bid beginning through the bribe to National Grid for approval to the end price.

Posted by: doughboys at March 16, 2010 9:39 AM
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