Open Letter to Chairwoman Sosnowski and Members of the Environment Committee

Jerry Elmer

May 23, 2013

Dear Chairwoman Sosnowski and members of the Environment Committee:

This e-mail follows yesterday evening’s hearing on S-901, the Governor’s Energy Reform Act of 2013, with its provision for purchasing large quantities of Canadian hydropower; and S-938, Chairwoman Sosnowski’s proposal for extending and enlarging Rhode Island’s landmark Distributed Generation Standard Contracts program. For your reference, I attach a copy of the written submission that I provided at yesterday’s hearing, which you can see here.

It was significant at yesterday’s (very long) hearing that – except for the Governor’s Administration – every witness from every sector spoke against the Governor’s energy bill. In broad terms, these witnesses came from four different sectors: (1) the utility (National Grid); (2) the environmental community (including the Environment Council of Rhode Island, Conservation Law Foundation, and many others); (3) fossil-fuel generators (including Dominion, Exelon, and the New England Power Generators Association); (4) renewable energy developers (including People’s Power and Light, Heartwood Group, and many others). It is a rare issue indeed that sees these disparate sectors in such complete agreement. Last night, the Governor’s energy bill was opposed by National Grid; the Environment Council, representing every one of the 60-plus small, medium, and large environmental organizations in Rhode Island; the fossil fuel industry; and all the renewable energy developers working so hard to build real renewable projects in Rhode Island!

As I acknowledged in my testimony yesterday evening, these different sectors each have their own reasoning for opposing the Governor’s energy bill.

National Grid opposes S-901 because it would result in rate increases for ratepayers; and, as Mike Ryan of Grid put it last night, “We are the guys who send out the bills.”

On Senator Archambault’s question as to whether the bill provides an actual mandate, Mr. Ryan quite clearly said two things. First, yes, the bill provides a mandate that will have adverse consequences for ratepayers. Second, whatever you call it, the provisions of the bill act like a mandate and, thus, will have the consequences of a mandate.

The environmentalists oppose the Governor’s energy bill because it would eviscerate existing renewable energy laws.

For example, the bill changes the definition of “eligible renewable energy resources” in Rhode Island’s 2004 Renewable Energy Standard. (See ¶ 2 on the attached testimony). When the General Assembly enacted the RES, it carefully excluded large Canadian hydropower because the law was intended to help new renewable energy projects. Canada is in the middle of a 50-year plan to construct big dams. Many have already been built; the rest will be built anyway, and do not need help from the RES.

The Adminstration’s rebuttal on this point was extremely revealing. The response was that the bill does not grant Renewable Energy Credits, or RECs, to Canadian hydropower. This statement was completely correct. It was also completely irrelevant. The problem with the bill is not that it gives RECs to large hydropower (and last night no one suggested that it did). The problem with the bill is mis-using the RES to send money to projects that are built anyway.

CLF and the other environmental organizations also oppose the Governor’s energy bill because it misuses the 2009 Long-Term Contracting Statute to procure Canadian hydropower. The purpose of this statute was to facilitate projects that would not and could not have been built but for the statute. The purpose of the LTC Statute was not to give a sweetheart deal to already-existing projects.

Here, again, the Administration’s response was extremely revealing. The response was that the bill does not touch or eliminate the 90 megawatts of renewables provided for in Section 3 of the Long-Term Contracting Statute. Again, this is completely correct. Again, this is completely irrelevant. No one suggested that the problem with the Governor’s energy bill is that it takes away the 90 megawatt mandate in Section 3. Those megawatts are already under contract; there has been an entire series of PUC dockets examining the reasonableness of those contracts. The problem with the Governor’s energy ill is that it mis-uses the separate, additional 150 megawatts found in Section 8 of the Long-Term Contracting Statute that were intended to assist new development, in Rhode Island, that would not or could not have been built otherwise.

Simply put, it is bad public policy to mis-direct the 150 megawatts in Section 8 of the Statute to large, existing hydropower facilities in Canada when those 150 megawatts were meant for new projects in Rhode Island. And the Administration is simply wrong to conflate the 90 megawatts in Section 3 (that are already under contract) with the separate, additional 150 megawatts in Section 8 (that do not yet exist).

But the most important point from last night is this: there is today no law and no regulation that prevents National Grid from contracting for Canadian hydropower (see ¶ 4 of the attached sheet). As I explained last night, we litigate so-called “Standard Offer Service” dockets in the PUC every year. Standard Offer Service is the electricity that nearly every residential customer in Rhode Island uses every day. There is nothing whatever in the law right now preventing Grid from contracting for Canadian hydropower.

Although there is nothing in the law preventing Grid from buying Canadian hydropower today, there are two very, very powerful reasons why Grid does not do so: (1) it is uneconomical; and (2) there is no transmission to bring the power here. And changing the law will not change those factors. You can change the law and Canadian hydropower will still be uneconomical. You can change the law, and there will still be no transmission available.

None of the environmentalists testifying last night are opposed to hydropower in principle. Indeed, hydropower done right could be an excellent component of an overall energy mix designed to lower carbon emissions. Environmental organization are opposed to eviscerating existing renewable energy laws that were designed to help new projects get up and running in order to subsidize already-existing Canadian projects.

In the end, there are many reasons to oppose the Governor’s energy bill. As National Grid said, it will have adverse impacts for ratepayers. As CLF said, it will eviscerate existing, successful renewable energy laws long supported by the General Assembly. And what is clear after last night is that there is unusual unity on the issue: National Grid; every small, medium, and large environmental organization; the fossil fuel generators; and every renewable energy developer all oppose the Governor’s energy bill.

CLF respectfully asks you to vote the Governor’s energy bill, S-901, down.

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