Rhode Island Could Remove Utility Incentives for New Offshore Wind Projects

A new bill in Rhode Island, which will facilitate procuring further 600 MW of offshore wind capacity, could cut the costs for consumers as it removes incentives for which utility companies were entitled by signing long-term contracts with newly developed renewable energy projects.

The bill, set to go before the State Senate on 7 June, amends the existing law and has seen several amendments itself since it was first introduced.

Along with the removal of incentives for utilities, the new version also pushes back the procurement deadline by two months, from the initially proposed 15 August to 15 October.

Rhode Island Governor Dan McKee announced the new legislation on 23 March, saying the state’s primary utility company would be required to issue the procurement for approximately 600 MW of newly developed offshore wind capacity no later than 15 August 2022.

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An additional 600 MW of offshore wind would further expand the state’s clean energy portfolio, with the potential to meet 30 per cent of Rhode Island’s estimated 2030 electricity demand – equivalent to powering roughly 340,000 homes each year.

Including the 30 MW Block Island Wind Farm, the first US offshore wind farm, and the 400 MW Revolution Wind project which got the state approval in 2019, offshore wind would cover 50 per cent of the state’s projected energy needs, according to the press release from the Governor’s office in March.

The bill now going before the State Senate was placed there by the Committee on Environment & Agriculture, which recommended indefinite postponement of the original bill and passage of Substitute A, the amended version.

Utility Incentives and Labour Agreements

For long-term contracts signed for new renewable energy projects in commercial operation, Rhode Island utilities were entitled to receive financial remuneration and incentives in the form of annual compensation, equal to 2.75 per cent of the actual annual payments made under these contracts.

The proposed amendment to the bill retains this for contracts approved before 1 January 2022 and specifies the approach for contracts signed after this date.

While the new bill initially set this to 2 per cent for long-term contracts approved on or after 1 January 2022 and removed it for contracts approved on or after 1 January 2027, it was later amended to remove the financial remuneration and incentives for contracts approved on or after 1 July 2022.

The amended version also expands on the requirements for the bidders, including employment and workers’ compensation.

Namely, if enacted, the bill would require developers to enter into an agreement with at least one bona fide labour organisation.

“The maintenance of such a labor peace agreement shall be an ongoing material condition of any continuation of payments under the contract”, the bill reads.

Solicitations by the utility will also reflect the requirements set by the new bill for employee salaries, under which developers will pay no less than the prevailing wages for certain positions.

“Developers of newly developed renewable energy resources shall pay each construction, operations and maintenance employees wages and benefits that are not less than the prevailing wage and fringe benefit rates at the journeyman level that are prescribed by the department of labor and training pursuant to chapter 13 of title 37, for the corresponding classification in which the employee is employed, and not less than the prevailing wage rates for employees for which there is no classification prescribed by the department of labor and training; provided that, a worker may be paid wages and benefits not less than the rate applicable to apprentices for the pertinent classification if: (1) The worker is a participant in an approved apprenticeship program; and (2) The approved apprenticeship program from which the apprentice is hired maintains a direct entry agreement with a certified pre-apprenticeship training program”.

Any proposed offshore wind contract with the state utility company would require review by the Office of Energy Resources, the Department of Environmental Management, and Rhode Island Commerce in the form of agency advisory opinions. Such contracts would also have to be filed with the Public Utilities Commission for review and approval, including opportunities for public comment, before they go into effect.

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Photo: Block Island Wind Farm; Source: Deepwater Wind /Ørsted