Fri, 02/23/2018 - 8:45am
The Block Island Power Company secured its second power procurement agreement with Shell on Feb. 20. The first agreement with Shell became effective May 1, 2017, when the power company switched off its diesel generators and began receiving power from the Block Island Wind Farm, or through the sea2shore cable that connects Block Island to the mainland, if output from the wind turbines is not meeting its needs. The current agreement will expire on Nov. 1, and then the second one will go into effect if approved by the R.I. Public Utilities Commission.
The flow of billing does not mimic the flow of electrons. While the electrons may come from the Wind Farm (or through the cable), BIPCo is billed for its power as if it comes directly from Shell.
The term of the first power purchase agreement was for 18 months and will expire on Nov. 1, 2018. The second contract is also for 18 months. In their considerations, members of the BIPCo Board also reviewed contracts for 12 and 14 months, and besides Shell, Public Service Electric and Gas Company also submitted bids.
The new contract is slightly costlier than the current one by six tenths of a cent. BIPCo President and Interim Board Member Jeffery Wright told his fellow directors that although energy prices remain low in the region, this contract spans two winter seasons, and one summer season, whereas the previous contract was the opposite. Unlike Block Island, the rest of the region experiences higher prices due to demand during the winter.
The 18-month term was chosen to smooth out prices for a longer period of time and to put the utility on an annual schedule, eventually, for rate reconciliations with the R.I. Public Utilities Commission.
The new contract is a “load following one,” which also comes with a slightly higher price tag. A load following contract means that BIPCo will pay the same price per megawatt regardless of how much power it uses. Other types of contracts are for a specified amount of power. If the utility uses more than that, they are left to purchase power for their needs on the spot market — and if that comes during a period when power is in great demand due to unusually cold or hot weather, the utility may pay a higher price. If the utility over estimates the amount of power it needs, it pays for the excess anyway.
Block Island Utility District Board of Commissioners members Barbara MacMullan and Bill Penn took part in the discussions, which were held in open session until it was time for the disclosure of the actual bid amounts, which took place in closed session, per the bidders’ request for confidentiality.
Both Penn and MacMullan took part in the closed session portion of the meeting as the Utility District is the presumed successor to the contract.
Decision by Rhode Island PUC on August 11, 2010 provides this cost for PPA language:
"The 2010 R.I. Pub. Laws 31 and 32 authorized Grid to enter into a new PPA with
Deepwater “changing dates and deadlines” and amending pricing terms such that the PPA
price in 2013 could still be the 24.4 cents per kWh contained in the 2009 PPA with a
3.5% annual escalator intact, but that would contain a provision that would allow the first
year price to be reduced if Deepwater realizes certain cost savings in the development
and construction of the Project."
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