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A Hummel Report Investigation

Testing the Winds

Four years ago nine East Bay communities formed a partnership to explore making money from wind  turbines, with the help of nearly half a million dollar of public seed money. That, in turn, attracted interest from a private developer and a potential $55 million project of his own. Instead of embracing it, The Rhode Island Economic Development Commission - which provided the seed money - saw it as a threat. And Jim Hummel finds that heading into 2013 the fate of the public project is unclear.

Click HERE to read Mr. Riggs' complaint with the Attorney General's Office.

Click HERE and HERE for our 2011 reports on wind energy and net metering legislation.

SCRIPT

Some call it an attractive energy source: renewable and sustainable.

Others say wind energy is expensive and inconsistent, needing government subsidies to survive.

Four years ago nine communities in the East Bay came together to explore tapping into wind energy as a way to generate revenue. The East Bay Energy Consortium - or EBEC - included Barrington, Bristol, East Providence, Little Compton, Middletown, Newport, Portsmouth, Tiverton and Warren.

Napolitano: ``Everybody was talking about regionalization and doing things as communities together to develop some efficiencies.''

Jeanne Napolitano was Newport's mayor when EBEC formed and serves as its current chairman. The consortium has secured a total of nearly half a million dollars since it was formed in 2009 - most of it through the Rhode Island Economic Development Corporation from surcharges on National Grid customers, dedicated toward developing renewable energy.

Napolitano: ``The  buzz at the time was renewables. It's still out there - renewables. And we decided that was the area we would focus on.''

Herreshoff: ``I was immediately skeptical of whether it would work.''

Longtime Bristol Town Councilman Halsey Herreshoff objected to his town holding and distributing the money. It had to because EBEC was not -and still is not - an official entity. He also objected to EBEC taking advantage of a law that would force National Grid to buy power from EBEC at a much higher cost - at the expense of its other ratepayers.

It's known as net metering.

Herreshoff: ``Why should we, if we could, make a profit on the backs of every single ratepayer in the whole state of Rhode Island. Wouldn't they hate us?''

Hummel: ``And in fact, that's what it is, right?''

Herreshoff: ``That's what it is because money doesn't just fall out of the sky, anything you do profit has to come from somewhere.''
Riggs: ``You have nine municipalities figuring out a way to get subsidized on the back of everybody else in the state without their knowledge of consent.''

Ben Riggs of Newport didn't know Herreshoff at the time but shared his sentiment. We first met Riggs two years ago when he fought a similar plan by the town of Portsmouth to take advantage of the state's so-called net metering law: producing power and selling it at a retail  rather than wholesale rate to National Grid.

Riggs then turned his attention to Tiverton.
A 2010 feasibility study said there were significant risks involved in a project of this scope and size. Part of the seed money from Rhode Island EDC paid for a tower to test the wind at the Tiverton Industrial Park, a potential site to locate turbines. The reality is while there are many windy places in the East Bay, putting turbines in most of them wouldn't fly politically.

But when the Bristol Town Council asked for the test results from the Tiverton tower, the lawyer who provided counsel for the project refused - saying it was `proprietary information.'  He would not even share it with council members privately.

Riggs: ``And now when  we asked the EBEC people to tell us what were the results of the wind  tower test: were the winds better or worse than you thought, are they going to sustain a project like this, they refused to tell us.''

Hummel: ``Tests paid for with public money.''

Riggs: ``Not only public money, but under a grant that was granted to Bristol and paid for by Bristol out of their checking account.''

Hummel: ``And it was the Bristol Town Council people who couldn't get access to it.''

Riggs: ``Exactly.''

Herreshoff: ``The reason  given was that it was proprietary and they didn't want a private business to get the information. Well there are a couple of things wrong with that. One has to suspect that because they wouldn't divulge the test maybe the results were not very satisfactory, maybe there's not enough wind in that particular location for all I know.''

Napolitano defended the secrecy.

Napolitano: ``I'm pretty transparent, but given these circumstances, the information, the type of information they wanted wasn't raw data, they wanted interpreted data, which we haven't done yet.''

In 2011 a private company was interested in developing its own multi-million turbine project. But instead of embracing it, EDC officials at the time saw it as a threat, according to internal emails obtained by The Hummel Report.

``Disaster. It will destroy the EBEC project - not only the $$ we put in, but the model trying to be developed, for multi-municipal projects,'' wrote Julian Dash, who headed the agency's Renewable Energy Fund, but has since left EDC.

The email was sent to director Keith Stokes in October 2011.

Katharine Flynn, another top EDC official who has since left the agency, sent an email to Stokes a month earlier, in September of 2011. ``....you could look at it as we spent 200k (if that is what the $$ are) to leverage a $55 million investment.''

But that's not how other EDC officials looked at it. A year ago, EDC lobbied for a bill in the General Assembly that would have brought EBEC under its wing and would have allowed it to go out for financing of its own. It was part of a larger bill reorganizing EDC that died a quiet death as the 38 Studios debacle played out during the session.

EDC has provided the Hummel Report documents on EBEC but a spokeswoman said no one was still left at the agency who knew enough about EBEC for us to interview.

Riggs: ``In order for them to make money on this, the same way Deepwater is making it off of Block Island, they need a power purchase agreement, where the state by legislation says instead of you paying 6.8 cents a kwh for electricity National Grid, you're going to pay 26 cents to this group, three of four times more.''

In an interview this week Napolitano says the energy landscape and the focus of their project have both changed dramatically.  She says EBEC will not ask for legislation again to come under EDC's wing or to become a quasi-public agency of its own, which have been lightning rods for the critics. Instead it will become a non-profit agency.

And it will not rely on net metering.

Hummel: ``How are you going to make it work financially without that?''

Napolitano: ``If we have a partner...''

Hummel: ``A business partner?''

Napolitano: ``A business  partner, whether it be National Grid or anyone else. We want to make sure when we present our plan it's economically viable,  not only for the cities and towns but for them to engage us.''

Hummel: ``Who's left holding the bag, or responsible, if it doesn't work financially, even if you think it's going to. Legal  issues and all of  that. Who's on the hook?

Napolitano: ``That's why we want to partner.''

Hummel: ``Doesn't that raise a whole bunch of issues about financing,  indemnity, legal responsibility, liability, all of that?''

Napolitano: ``Absolutely. Absolutely. But it will be written in such a way ultimately I believe it's going to be  a win-win for those that participate. No liability to cities and towns. None of us want that. None of us can afford it. And the responsibility of revenue projections and anything we propose will  be with our business partner.''

Herreshoff - who was the lone dissenter back in 2009 - eventually persuaded his fellow council members last fall to withdraw from EBEC after a series of contentious meetings with the project manager and lawyer representing the consortium.

Riggs has asked Newport City Council to cut ties with EBEC as well. The council was scheduled to address his request last week but Napolitano asked for a month's delay while she puts together a status report for her colleagues.
Riggs has also sent an official complaint to the Attorney General's office asking for an investigation into how EBEC operates and potential Open Meetings violations. The AG says that investigation is still pending.

Four years and four hundred thousand dollars later, the communities still have a long way to go to decide how to move forward. But Napolitano expects movement - one way or the other - this spring.

Hummel: ``What do you get for $403,000?''

Napolitano: ``Well when you consider  the scale of the project, everything that we pay for is professional service,  whether they be project manager, engineering or legal. And this is a very complex project, we've only scratched the surface.''

Napolitano admits the devil is in the details - but so far those have been largely been unavailable to the public.

Napolitano: ``If our model  works, it's going to be on a competitive basis. It's going to be  because it does work. Because they can make money and we can make money.''

In The East Bay, Jim Hummel, for The Hummel Report.

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