PROVIDENCE — Days ahead of the General Assembly's expected wrap-up this week, House leaders have resurrected a bonus payment to the state's dominant electric utility for signing new offshore wind contracts with developers.
Heading into the final stretch, the House has also scheduled votes on a long controversial bill to grant drivers' permits to people who cannot establish their "legal presence in the United States."
The proposed bonus payment to R.I.'s largest utility was initially proposed by Gov. Dan McKee and then stripped from the version of the offshore wind bill the Senate passed on June 7.
The Senate-passed bill requiring the utility now owned by a Rhode Island affiliate of the PPL Corporation to solicit another 600 megawatts of offshore wind power omitted an incentive that in the original iteration of the bill was equal to 2% of the total value of any contract.
The payment would have added another $3.2 million a year to costs borne by the state's 500,000 or so electric ratepayers, according to estimates by the Rhode Island Office of Energy Resources. But even at that, the utility's owners said the payment was too low.
That was simply too much to ask of Rhode Islanders, said Sen. Dawn Euer, lead sponsor of the bill. "I don't think that ratepayers shouldering that cost makes any sense," the Newport Democrat said in an interview.
House leaders have called for votes by the House Corporations Committee on Tuesday on reworked versions of the House and Senate offshore wind bills that allow a bonus payment of up to 1%.
Both require "financial remuneration and incentives [to] compensate the electric distribution company for accepting the financial obligation of the long-term [offshore wind] contracts."
As currently written the bill is retroactive.
The latest version says: "For long-term contracts approved... on or after January 1, 2022, the financial remuneration and incentives shall be in the form of annual compensation up to 1% of the actual annual payments made under the contracts through Dec. 31, 2026."
"For long-term contracts approved ... on or after January 1, 2027, financial remuneration and incentives shall not be applied," unless the state's utility regulators are convinced of the need.
The reworked bill would allow the electric company to solicit proposals for up to 1,000 megawatts — and at the very least, 600 megawatts of newly-developed offshore wind capacity — by Oct. 15, 2022.
There has been no comment by Senate leaders on this dramatic shift in the bill to benefit a utility that hired a former House speaker, William J. Murphy, as one of its two $5,000-a-month State House lobbyists.
McKee spokesman Matt Sheaff said this when the Senate bill — omitting the bonus payment — passed:
"The governor supports the bill as amended that came out of committee last night and thanks the sponsors for protecting ratepayer interests while advancing clean, renewable energy in the Ocean State."
On Monday, McKee spokeswoman Alana O'Hare said: "Governor McKee thinks the bill represents a strong compromise with sufficient safeguards in place for the ratepayer." Asked what McKee meant by "safeguards," she said: "The compromise from 2% in the original bill to 1% in this version is protecting ratepayers from shouldering additional cost."
When asked the rationale, Larry Berman, a spokesman for House Speaker K. Joseph Shekarchi, said:
"It's not a resurrection of the bonus, in your words, but it is a cap."
He also said the reworked bill is a result of negotiations between representatives of the House, the Senate and the governor.
Shekarchi said: "We capped the remuneration at 1% as an appropriate guardrail, with the PUC making the ultimate determination because that's what the commissioners do for a living.
"The cap may be zero, it may be a half-percent, but it can't exceed 1%, and we're leaving that up to the PUC," he said.
"We also increased the market competitive procurement from 600 MW of offshore wind capacity to up to 1,000 MW to better meet the standards established last year in Act on Climate."
Offshore wind is widely seen as key to a state mandate to reach net-zero greenhouse gas emissions by 2050. Small and densely populated, Rhode Island doesn't have the space for utility-scale wind farms on land or similarly-sized solar farms. But the strong winds on the relatively shallow ocean waters off Massachusetts and Rhode Island make them extremely attractive to offshore wind developers.
The nation's first offshore wind farm, a 30-megawatt demonstration project, was built near Block Island.
While the utility is getting an incentive equal to 2.75% of the value for the Block Island Wind Farm contract, there is no such payment for a second, larger project.
When the Revolution Wind contract came before the Public Utilities Commission in 2019, there were questions about the credibility of National Grid's fears about the risks associated with offshore wind contracts.
So when National Grid asked for an incentive that would have totaled $88 million over the contract term, the commission ordered proof to justify the request. After reviewing the evidence, the commission determined that no payments were justified.
Then-PUC chair Margaret Curran described National Grid's testimony in support of remuneration as "not credible."
In their written decision, she and the other commissioners said utilities can be mandated to purchase energy and that no incentive is required. "The PUC sets rates based on law, economics, and evidence," she and the other commissioners said in their written decision.
"It does not hand out a 'gratuity' or tip a utility because of its cooperation in signing a contract that poses no risk to the utility to advance state policy."