April 1, 2011

Darn (?), the Price of Electricity is Dropping

Monique Chartier

Let's go back a month.

Rising world energy prices, spurred by demand from India and China, will make wind energy off Rhode Island's shores a viable economic option, Governor Chafee told a group of Washington County town planners and officials Thursday night.

Fast forward to today's ProJo.

On Thursday, the state Public Utilities Commission unanimously approved an across-the-board rate decrease for National Grid’s 482,000 customers that will go into effect April 1.

For residential customers, the standard offer rate — or the price of power without any surcharges factored in — will plummet 26 percent, from 9.4 cents per kilowatt hour to 6.9 cents.

Oops. The Deepwater Wind project just got even more unviable.

Of course, Governor Chafee is not the only person misguidedly looking for such rate increases, whether for power or at the gas pump. Advocates acknowledge that green fuel sources only "work" if fossil fuel sources achieve a certain quite elevated price point.

In the real world, far from being quietly crestfallen at the announcement yesterday from National Grid, most people will be only too happy to funnel the savings, however modest, from lower power costs to savings, other household bills or frivolities; i.e., to more productive uses.

Funny how what's good for consumers is bad for green energy. Isn't that a major red flag about the wisdom and practicality of this (heavy quotes) "industry"?

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But the Chafee administration will realize that the price reduction in electricity can and should be effectively nullified by the addition of a higher tax on electricity -- in the amount of the price reduction. People have become used to the current higher electric rates; therefore, the new taxes won't be noticed!

Perhaps the Chafee administration will eventually establish a tax czar -- one who automatically imposes a higher tax on any commodity whose market price declines.

Posted by: Bill at April 1, 2011 5:46 PM

I believe the scam was that they start at a high rate of 20 cents/kw and GUARANTEED that the rate will increase 3% every year, for 20 years. Ending at about 48 cents/kw.

The Deepwater contract also stated the venture capitalists profit is guaranteed no matter how cheap Narragansett Electric gets the rate down by using Natural Gas from the US.

Posted by: dave at April 1, 2011 6:03 PM

Of course National Grid can lower the price of electricity from 9.4 cents/KWh to 6.4 cents/KWh because it is not purchasing diesel fuel generated electricity. It’s being generated by cheaper natural gas and nuclear. But wait, the swing of the bat is coming and you Rhode Island rate payers will hear the sound of a homerun being hit by National Grid and Deepwater Wind!

RI has bought into a Trojan Horse trying to be the first in the nation and is now locked in with Deepwater Wind at 24.4 cents/KWh in the first year (subject to annual escalations of 3.5% over 20 years) plus the extra cost (which has not been determined yet) of the underwater power cable and onshore electric grid interface both at Block Island and South County plus the extra needed equipment to smooth out the power fluctuations that will trip out power-grids meaning Block Island Power & Light Company will still need to keep its diesel generators in standby mode. Those higher extra costs will now be passed on to all state-wide rate payers once the cable is connected to National Grid in South County.

Because of very high rate-payer cost my state and state-wide electric company closed down the first national attempt to construct an offshore wind farm in the middle of a national whale sanctuary by Grays Harbor Ocean Energy Co. LLC of Seattle, Washington which is piggy-backing onto Deepwater Wind’s Block Island project. Their web site still lists the Hawaii Penguin Bank as a viable project but it is a totally dead project especially trying to charge 20 cents/KWh when the diesel generator cost to produce electric is 10 cents/KWh. The only wind farms you’ll find in HI will be on land and we are tying the islands together with undersea electric distribution cables.

Also there now appears to be some concern about the anchoring of offshore wind farm platforms standard methodology of pile-driving into the seabed which causes an infernal noise with sound pressures higher than 200 decibels. There is concern that whales might become disorientated along with other marine population. Recent reports by German scientists show that porpoises hearing can be damaged at sound exposure levels of 160 decibels. Behavioral changes have been documented at much lower levels. So once Deepwater Wind starts construction and suddenly the marine life in Block Island Sound start disappearing besides high electric rates spread state-wide RI might lose a recreational sport it is known for.

RI could have saved a lot of trouble if they just made a quick telephone call to HI and asked for an opinion on offshore wind farms. HI and the US Department of Energy have been in partnership for over 30 years testing green energy systems and have massive amounts of documentation on hand. From 1987 to 1993 on Oahu the largest wind turbine in the world at the time operated in research mode the 3,200 kW Boeing Mod-5B turbine. There is an unbelievable array and amount of green energy resources in HI which are now being commercially tapped into and merged together to form a cohesive continuous supply of clean green energy so the state as a whole can reduce its imported oil dependence 70% and resulting electric bills to rate payers by year 2030. As each new grid system comes on line my electric bill becomes cheaper.

Posted by: Ken at April 1, 2011 7:19 PM

Maybe the prospect of competition from wind power woke National Grid up. That's certainly a positive development for homeowners and businesses.

Posted by: bella at April 1, 2011 11:56 PM


Your statement; “Maybe the prospect of competition from wind power woke National Grid up. That's certainly a positive development for homeowners and businesses.” makes no sense!

The only thing National Grid did was to wake up and understand a way to stick it to the Rhode Island rate payers! Under RI law National Grid has to purchase the power from Deepwater Wind which is now about 4 times the going rate of 6.9 cents/KWh they are currently paying for power and oh by the way, most AR contributors are totally against state employees and teachers receiving a 3% retirement COLA; National Grid gets a 3.5% compounding COLA every year for the next 20 years on top of that 24.4 cents/KWh they are going to factor into each RI rate payer rate which should end up at approximately 48.6 cents/KWh or more after 20 years (about 7 times more than what you are now paying for electricity)!

I don’t see any positive development for homeowners and businesses in RI.

Posted by: Ken at April 2, 2011 12:56 AM

bella is one of those drones the left loves.She hears a word like "green"or "diversity"and starts salivating like one of Pavlov's dogs.
It doesn't have to make sense as long as it has the right politically correct label.

Posted by: joe bernstein at April 2, 2011 3:56 AM

lol. I'll give you a better reason: how about supply and demand?

You guys have got to stop jumping on a market fluctuation as proof-of-concept that green energy sources aren't viable.

"How is National Grid able to do this? The simple answer is that the power purchased by the company is cheaper this year. It actually hasn’t been this cheap since 2004, when the standard offer rate was 6.7 cents per kilowatt-hour.

Part of the reason for the decrease is likely due to the price of natural gas. National Grid gets about a third of the power it provides Rhode Island from natural gas-fired power plants in New England.

The price of natural gas plummeted in 2009 to a seven-year low, according to ISO-New England, the independent, not-for-profit corporation that oversees the distribution of electricity throughout New England. It came up slightly last year, but nowhere near where it once was, and has stayed steady through the first three months of this year."

So a commodity price fell to a seven year low in 2009 (mostly because people STILL don't want LNG in their back yards) -- and the fine folks at National Grid have finally decided to cut us a small break two years later? Oh, let me thank them for their table scraps!

Also, nice job skipping over the bottom of the article, in which it is specifically stated that the price drop was in part, due to an *overestimation* in the price of Renewable Energy Certificates:

"The company purchases the power from sources all over the Northeast through what are known as Renewable Energy Certificates. It uses money raised from the renewable-energy surcharge to purchase RECs.

In 2010, the certificates were cheaper than National Grid had projected, so it finished the year with a $5.5-million surplus in that account. It will roll that money over to purchase RECs over the next calendar year, so customers won’t have to pay. They will also get a small amount of money in return. The credit will remain in effect through March 31, 2012."

This is America. Of course we'll keep burning coal, we'll keep burning natural gas, and even foreign oil -- but if ya'll keep saying small price drops mean we shouldn't invest in ANY domestically produced offshore wind, solar, or other renewables, you're still not only mortgaging your childrens' future, but short-changing what little industrial manufacturing capacity this country has left.

Posted by: jparis at April 2, 2011 1:38 PM


There is nothing wrong with off shore wind farms and I am not against them however, there is a way to make alternate energy (green energy) blend in and fit into the particular environment. What is happening in RI with Deepwater Wind is it is being rammed down people’s throats whether they like it or not at a price that is unsustainable.

A proper fit for Block Island would be Ocean Power Technologies (OPT) PowerBuoy® system which extends 14 ft. out of the water and looks like normal navigational buoys. The anchoring system is environmentally friendly. These buoys can be daisy-chained into any electrical power configuration plus wave action is more constant than wind power so the power is more predictable.

This system has been tested in Europe, NJ and HI. In HI the Navy has it connected to the normal power grid and is very happy with the results for over a year now.

The PowerBuoy® are cheaper than the offshore wind turbines and platforms, for maintenance they can be floated back to shore, no landscape blight plus in MW configuration the selling purchase power agreement price is about 11 cents/KWh.

Posted by: Ken at April 3, 2011 12:07 AM

Hey Ken-how is that $4.30 a gallon gas playing in America's most expensive state?

Posted by: Tommy Cranston at April 3, 2011 8:20 AM

@Ken: I agree with your first statement on principle pretty darned well. But then the rest of your post is spent pushing a little hard for a singular technology, eh? Isn't this what people are upset about with Deepwater?

There are completely different environmental factors to take into account when looking at a wave-based energy system, not the least of which being local marine life impact studies, anchoring feasibility studies, and life-cycle impact studies. Then there's your cited 11 cents/KWh, which obviously wouldn't be set by anyone other than the distributor / carrier. This is not an area of policy I'm unfamiliar with.

Deepwater has an agenda as well to be sure, but I've seen as many positive and negative studies dealing with both offshore wind and wave power.

To say that any home-grown energy technology should be developed to the exclusion of others is the type of picking winners I don't think government should be involved in either. At this point, I agree that all safe options at various levels of development should be explored.

Posted by: jparis at April 3, 2011 9:40 AM

JParis, I'm a little confused. On the one hand, you are critical that I have highlighted a reduction in an energy rate that is due to market fluctuations. On the other, you exhort us to disregard market forces when it comes to green energy for the sake of future generations of children.

Secondly, here's the question troubling many people with regard to green energy:

Green energy costs 2-4 times that generated by fossil fuels (and it kills jobs, it doesn't create them; Spain has amply demonstrated that).

Why in the world should we pay that premium in view of the poor state of the "research" that purports to demonstrate that man's 6% share of greenhouse gases generated is causing global warming (... except that it's not because even warmists acknowledge that we are in for decades of cooling - and how that can be, by the way, if the effects of CO2 are so dire)?

Posted by: Monique at April 3, 2011 12:11 PM

@Monique: I'll do my best to clear my stance up for you, sorry.

My point was that market fluctuations will continue to happen, and that we shouldn't make long-term energy portfolio decisions based upon those fluctuations. Are we on the same page there?

When it comes to green energy technologies, we DO need to look at market forces, and realize that not only is more R&D funding required to improve the cost and efficiency of these technologies -- but that it may take some government intervention to protect common goods the market doesn't really care about (dependence on foreign oil, environmental concerns, not exporting all our manufacturing to China) to allow a new and relatively untested technology to have a chance to flourish.

Good Example: Government (DARPA) helped create the Internet, we all know that... a common good no singular corporation could have handled.

Bad Example: Government also invested heavily in corn-based ethanol... in essence picking a winner for the market, when that "winner" is actually highly inefficient and not particularly environmentally friendly.

So hopefully that draws a distinction?

As to your second point: Can you cite something about your Spain comment? I don't dispute what you are saying about cost AT ALL by the way -- but I don't think producing photovoltaic cells and wind turbines here in the U.S. could "kill jobs" as you say.

I don't think we should pay the entire premium at all, and I think Americans should be given the choice as much as possible as to where their energy comes from. That's fair, right?

I put forth that our energy infrastructure, natural resource security, and environmental health are common goods. Disagree? Please let me know why.

As such, I think the government should absorb some of that difference in price in the *short term* in order to encourage innovations in the industry that could directly lead to real improvements in efficiency and cost... but NOT by picking winners (as I mentioned above).

Lastly, I'm not about to debate global climate change science with you, sorry. I worked at the Union of Concerned Scientists for a while, and I have them to do that for me :)

If you'd like to go read their reports on climate science as I have, I think you'll find some scientific evidence that's hard to argue against.

Posted by: jparis at April 3, 2011 1:39 PM


I mention the Ocean Power Technologies (OPT) PowerBuoy® system as an alternative to building near shore 300 ft. to 400 ft. offshore wind turbines. As far as the local marine life impact studies, anchoring feasibility studies, and life-cycle impact studies all have been accomplished in HI in accordance with the National Environment Policy Act (NEPA).

The project study of the PowerBuoy® system resulted in a finding of no significant impact (FONSI), which is the highest such environmental rating. The results of this study are included in a draft Report to Congress being prepared by the US Department of Energy titled “Potential Environmental Effects of Marine and Hydrokinetic Technologies”. OPT also achieved the World's First Lloyd's Register Certification for Utility Scale PB150 Wave Power Device.

As far as the purchase price agreement 11 cents/KWh price, that is the suggest price OPT has posted on their web site in comparison to other alternate energy systems.

State of HI is a designated live testing center in partnership with the US Department of Energy. There are all sorts of systems in various stages of test or commercial installation here including the only place in the nation where General Electric Co. is testing real-time the smart grid in a populated area with an alternate energy wind farm connected to the grid.

State of HI Clean Energy Initiative requires a mix of alternate energy systems to obtain the goal of reducing state-wide imported oil 70% by year 2030 (40% alternate energy and 30% energy efficiency). Already of the 8 islands some are up to 40% reduction utilizing alternate energy.

Tommy Cranston,

HI is very proud to have the highest fuel prices in the nation. Average is around $4.30/gal in Honolulu but my bank gives out discount cards so I pay around $4.03/gal. Oahu is where the oil refineries are so gasoline here is lower. In Hawaii County gasoline is already $4.50/gal. Hopefully gasoline will go above $5/gal soon.

6 grants totaling $2.6 million were just distributed to the various companies that are building the nation’s first public alternate energy powered electric vehicle (EV) charging system. Under HI Clean Energy Initiative certain number of parking stalls in parking lots and parking garages must be reserved for EV charging. Also one vendor is building 17 robotic 5 min battery swap out stations on Oahu. Of the projected 150,000 state-wide EV public chargers 50,000 will be located in Oahu. There currently are over 270 registered EVs in Oahu. At today’s current electric rate a 100 mile charge costs $1.50 in electricity. HI is already receiving Chevy Volts, Nissan Leaf, Tesla and Renault EVs.

General Motors has also partnered with the HI gas company which is the only manufacturer of artificial natural gas in the nation using waste products from oil refineries and organic waste to build the nation’s first hydrogen fuel cell refueling network. GM has already shipped Chevy Equinox hydrogen fuel cell cars to HI.

By 2012 we in Hawaii will have transitioned over to EV or hydrogen fuel cell and will be paying average $2.00 per 100 miles. Average daily drive in Honolulu is 40 miles. Don’t forget, in HI you get up to $12,000 rebate for an alternate energy vehicle and if EV another $500 rebate for the home charging station.

Posted by: Ken at April 3, 2011 6:23 PM

J Paris-the entire climate change debate has become so politicized that it's becoming impossible who is disseminating accurate facts and who isn't.
What particularly concerns me is the targeting of Western industrialized countries as opposed to the "wink,wink,nod,nod" attitude taken by the international climate cchange gurus towards Brazil,Madagascar,Indonesia,China,etc-we could run up quite a list.
The actual pollution doesn't have a political component-it's just dirty.
Now,even if climate change has occured to the extent that the left wing groups like the "concerned scientists'you've mentioned claim,the causation is anything but clear.
There are always changes occuring in and about the planet as the result of it's very fabric and it's unlikely mankind can assert control.
Nowadays a lot of things are politicized to the point that reasonable discussion is moot.

Posted by: joe bernstein at April 4, 2011 5:59 AM

JParis perpetuates the Leftist myth that government created the internet. It did no such thing. That's like saying that Government, not John Browning at Colt's, invented the 1911 pistol because the Army paid for the contract, or that NASA created the Saturn V rocket.

Government did none of those things. The Internet was invented by scientists at Bolt, Baranek and Newman (BBN) under a DARPA contract.

And if we had a genuinely free market in electricity instead of a government-run monopoly regulated by the slow and clumsy PUC process, the price decreases due to lower input costs would appear much more quickly.

Competition is the solution, not central planning. This has been consistently proven by the experience of every command-and-control economy in history, most colorfully by the very Marxist governments that JParis and his allies look to as the role models for America.

Thanks, but we're not having any, and Americans are about to puke back up the Marxism you've force-fed us to date. You might want to stand out of the way when that happens.

Posted by: BobN at April 4, 2011 6:41 AM

@Joe: The conclusion you seem to draw from the politicization of climate science seems to be "we should give up". Sorry, but I can't accept that answer. I also defend the assertion that UCS bases its climate stances on hard science, not politics. Also, the comparison between the U.S., with its decades of technological growth over Brazil, India, etc. is erroneous.

@BobN: lol myth? I'm sorry -- did DARPA NOT fund huge computing labs in major universities across the country? I acknowledge that the government agency didn't DIRECTLY make the research breakthroughs, but they did, in large part fund them. Nice word twisting.

Free competition when oil, gas, and coal all have billions of dollars in advertising and lobbying money, plus gigantic infrastructure investments -- well, it's a hilarious concept to be completely honest.

And I also don't like your insinuations that I'm a Marxist.

Or VERY SPECIFICALLY your veiled threats about what will happen when "Americans are about to puke back up" what I've "force fed them".

This will be my last response to you on this forum. I hope the moderators are watching, because this is part of the reason the left and the right can't engage in intelligent debate.

Ken and Monique and Joe all engaged me on points... thank you for being adults.

Posted by: jparis at April 4, 2011 6:58 PM

J Paris-Yes,we've been involved in technological progress longer than than India and Brazil,but that doesn't absolve them of responsibility for being mindless about destroying environmental resources.
I took an environmental science course in the early 70's,some time before the debate became so heated.At that time the US was well into reducing pollution in the air and water.
Some major environmental legislation had been enacted and results haven't been bad so far.
Anectdotal:Iwas in Pittsburgh in 1967 and again in 2007.
It seemed like a totally different city.
I moved to Chicago in 1976=driving in through "steel corridor"of NW Indiana and the south side of Chicago was like smoking a stogie in the car.
When I moved back east 8 years later there was a noticeable difference.
Europe,both east and west burns lignite to produce power.
It's almost as dirty as peat and it destroys people and their environment.
The US has only one lignite-burning powerplant-it's in Texas.
I think we've done a good job comparatively.
It has cost us jobs and productive industry in the process.
Just saying that slogans and boilerplate positions aren't the best way to address the environmental issue.
BTW I didn't say "give up"-I just can't figure what and who to believe anymore.

Posted by: joe bernstein at April 5, 2011 12:01 PM

@Joe: As to your first point, certainly not -- I just think it means that we need to help them out, specifically in terms of increased technology transfer -- far moreso than has been discussed to date from our side during the failed Doha Round of WTO talks. That's the price we'd have to pay to get them on track ecologically, we'd have to give up our superiority on a number of technologies -- and that's a tough sale to the American people even I'm willing to acknowledge.

And I'm VERY glad you don't want to give up... I misread you. That you can't figure out who and what to believe in politics anymore is (I think) a trait shared by many if not most thinking people, both liberal and conservative.

That's why I do my very best to focus on the science. Being younger than you, I still have a lot to see and learn... but on a recent cross-country road trip I found West Virginia coal country to be not nearly so "wiped out" as some leftist groups would have you believe.

But, by the same token, strip mining as a practice is still ongoing in this country -- and it does awful things to the environment that have been researched and confirmed ad-nauseum.

So I know we need coal for the foreseeable future and that our overwhelming focus on anthracite is a very good thing.

But I also know that Carbon Capture and Sequestration (CCS) is a *dangerous* joke of a public relations campaign though -- we have no idea what man-made pockets of carbon could do to our rock strata over long periods of time.

Believe the science. Read the science. Have science nerd friends interpret the science for you if need be -- but go to the source. Get around the slogans and boiler-plates.

One of the things I loved so much about working for UCS was that in my department especially, we encouraged scientists to engage directly with lawmakers on issues that mattered to them and that they were scientific experts on. That's Democracy, and I think we can still make it work!

Posted by: jparis at April 5, 2011 2:07 PM

J Paris-strip mining definitely is harmful to the environment but at least we don't have to see families tortured by cave ins.
Most of it out in the the middle of nowhere anyway.
I have a German language photojournalism book I picked up in the Netherlands around the late 90's-it has some really incredible images of environmental damage done by the old USSR.The book had no political point at all(I'm halfass literate in German)but it was more like cinema verite.Scary stuff.

Posted by: joe bernstein at April 5, 2011 4:40 PM
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