Deepwater Wind Farm Premium Costs Could be Underestimated (USA)

Electricity from a wind farm planned for off of Block Island could come with a higher cost premium than previously estimated, according to National Grid.

In a filing with the R.I. Public Utilities Commission, the utility said that depending on the forecasting model used, electricity from the Deepwater Wind farm would cost $409 million or $415 million more than power from traditional sources such as natural gas plants. Previously, National Grid pegged the above-market cost at $390 million.

In the filing, National Grid cautioned that last week’s estimate represented a “snapshot in time, and we would expect [that] a long-term forecast would fluctuate each time the forecast is performed over the course of six months to a year.”

National Grid said changes in natural gas price forecasts primarily drove the change in the estimated price of electricity from the wind farm. As the price of natural gas has fallen, the gap between electricity generated with it and the contracted price for Deepwater Wind electricity has grown wider.

The price of electricity from the wind farm has been controversial. After the utilities commission approved a contract between National Grid and Deepwater Wind, two plastics manufacturers sued seeking to block the deal. The companies – Polytop Corp. and Toray Plastics (America) Inc. – said the contract would add millions of dollars more to their electric bills each year. Last week, the R.I. Supreme Court said the companies had legal standing to challenge the approval and allowed the lawsuit to continue.

“We are pleased that the court has agreed to review the merits of the PUC’s majority approval of this power-purchase agreement, especially in light of the fact that National Grid has recently updated its estimate of the above-market cost of this project to Rhode Island ratepayers from $390 million to between $409 million and $415 million,” said Mike McElroy, a lawyer for Toray and Polytop.

By Chris Barrett (pbn)


Source: pbn, April 28, 2011;