Log In


Reset Password
  • MENU
    Local Columns
    Tuesday, May 28, 2024

    Block Island Wind Farm: Windfall for the politically connected

    Workers on the jack-up construction vessels Brave Tern and L/B Caitlin prepare to install the final blade on the fourth of five power-generating wind turbines as part of the Deepwater Wind project three miles south of Block Island on Monday, Aug. 15, 2016. The $300 million, 30 megawatt, five-turbine project will be online generating power by the end of this year. (Sean D. Elliot/The Day)
    Buy Photo Reprints

    It's hard not to admire the five spanking new windmills off the southeast coast of Block Island, America's first offshore wind farm.

    They seem to be getting good reviews on the island, too, where anxiety about how they would look seems to be subsiding.

    The windmills, as seen in a series of mesmerizing aerial photos last week from The Day's Sean Elliot, are actually quite beautiful. From the air, the five look like a graceful art installation, statuesque sentinels staggered in a line just off the island's shoreline.

    They are a gift to the island, a project that will replace an aging and derelict system of diesel power generators, running off fuel brought by ferry, that now produces the most expensive electricity in the country.

    The island will not only see a drastic reduction in electric rates but also will be connected by cable for the first time to the mainland, a $100 million umbilical cord that also will bring high-speed internet.

    The greatest beauty of the wind farm, though, may be seen by political observers, who can't help but marvel at the way this economic windfall has gone to the politically connected — millions of dollars in profit collected in little increments from all of Rhode Island's electric users.

    The deal making for this at the highest levels of Rhode Island politics has gotten only scant attention in the extensive news coverage of the creation of America's first offshore wind farm.

    One outspoken critic was the former attorney general of Rhode Island, Patrick Lynch, who cried foul about the above-market rates guaranteed for the windmill-generated kilowatts, while running for governor, a race he eventually abandoned.

    "The 'demonstration project' off Block Island would demonstrate how easy it is to make money off Rhode Island," Lynch once complained.

    One of the best explainers about the politics of this money-making clean energy deal appeared in Forbes last spring, under the headline: "Is America's First Offshore Wind Farm A Real Revolution Or Just Another Green Boondoggle?"

    The long piece by staff writer Christopher Helman explains how the project got its guaranteed above-market electric rates after intervention by state lawmakers and then-Gov. Donald Carcieri.

    Under the deal engineered by Carcieri, Rhode Island's regulated utility, National Grid, will be required to pay 24.4 cents per kilowatt hour for the windmill power — more than twice current market rates.

    Sweetening the deal even more, there are price escalators of 3.5 percent a year, so that by the end of the 20-year contract period, National Grid will be paying 50 cents per kilowatt hour from the wind farm.

    Forbes calculated that the wind farm eventually would generate some $900 million, and with $100 million in energy tax credits, the investors in the project are looking at a return on investment on the order of 7.5 percent.

    "It is a legally guaranteed, risk-free money machine," Forbes noted.

    And how did it happen?, Forbes asked.

    "Connections," the magazine said, explaining that the farm developer, Deepwater Wind, is run by none other than Jeff Grybowski, former chief of staff to Gov. Carcieri.

    In the end, Rhode Island's decision to override market conditions for the price of electricity, to encourage a green energy project that is getting national attention, may be worth the extra money ratepayers will be charged for electricity.

    It is too bad it is tainted by what looks like an insider deal making the politically connected richer.

    At least Rhode Island is getting a showpiece out of its insider political deal making; Connecticut just seems to get more bonding debt from its own.

    The new windmills are indeed a beautiful thing, especially for people who pay for electricity on Block Island.

    This is the opinion of David Collins.

    d.collins@theday.com

    Comment threads are monitored for 48 hours after publication and then closed.