National Grid to Buy Power for 24.4 cents. Who is going to pay for it?

We wanted to tell you about this as soon as we saw the press release, but National Grid couldn't get our power turned back on fast enough. Weird. They can't call you when you ask them to but if you tell them that you are going to call the Television Stations, a supervisor calls you right away!

On December 10th, 2009 Alex Kuffner, a Staff Writer for the Providence Journal, wrote:
National Grid will pay Deepwater 24.4 cents per kilowatt-hour of electricity starting in 2013 when the eight-turbine wind farm three miles from Block Island is expected to go on line. The price will then rise by 3.5 percent annually over the 20-year agreement.

National Grid estimates that the typical Rhode Island household’s annual electric bill — which currently stands at about $957 — will see an increase of $16.20 in the first year of the contract. That includes a 2.75-percent markup on electricity generated from renewable sources that National Grid is allowed by state law. It also includes the cost of a power cable from Block Island to the mainland that would be required for the project. The wind farm would supply power to Block Island, but any excess would be fed to the rest of the state.

National Grid’s estimate of the additional cost for its customers differs significantly from Deepwater’s calculation, which is about $7. The discrepancy can be explained, in part, because Deepwater’s number does not account for the cost of the cable. Deepwater did not factor in that cost because it’s still unclear who would install it.

Companies like National Grid get away with stuff because they don't tell you the whole story. We will help you by looking at our electric bill.
National Grid Charges us:
For Delivery Services
$0.03376 per kwh a Distribution Energy Charge (Fair Enough)
$0.0035 per kwh for a Dem Side Mgmt Chg (Is that Politics or Environment?)
$0.015 per kwh for a Transmission Charge (What are they transmitting that hasn't been distributed?)
$0.00235 per kwh a Transition Charge (Transition from what?)
Total Distribution Cost Per Kwh is $0.0561

For Supply Services
$0.092 per Kwh Energy Charge (Didn't you already charge us for distributing energy to us? We liked that price better)
$0.00093 Kwh Renewable Energy Charge (Is this where the wind turbine expense will end up?
Total Supply Cost Per Kwh is $0.09293

Sub Total is $0.14754 per Kwh

And then they charge us a Gross Earnings Tax. Your welcome for your bonus CEO.

Wait a minute. They say the average bill will only go up $16.20 in the first year based on the 9.2 cent charge. It really costs us 14.754 cents. That is 160% of what they say they currently charge us. It doesn't seem like much until you realize that it's multiplied by thousands of kwh.

$16.20 multiplied by 160% is $25.92. They are going to pay 24.4 cents per kwh. That is 165% of what we actually pay. Now that we have determined what we actually pay, let's figure out what they are actually going to charge us. $25.92 multiplied by 165% is $42.768 more, THE FIRST YEAR. Before they figure out they and the wind turbine folks have underestimated some other expense they need to pass along to us.

They base their figures on 500 Kwh for the average user. That doesn't add up with their numbers either. $957 divided by 500 Kwh is $1.91 per Kwh. $957 divided by $0.14754 is 6486 Kwh per average customer. Makes a little more sense.

He goes on to say:

A calculation that uses the 12.9-cent number as a baseline would close the difference with the 24.4-cent price of wind power. Doing that results in Deepwater's $7 figure for the additional cost to the typical customer, defined as someone who uses 500 kilowatt hours of electricity a year. To put that number into context, a ratepayer who uses that amount of power currently pays about $957 a year.

However, Grid offers a different approach. For one, the utility did not use a projection in its own calculation. It compared the 24.4-cent cost of wind power to the current 9.2-cent cost of wholesale power.

Moreover, Grid says, Deepwater's figure is incomplete. The utility says that the cost of the cable, estimated at $35-$50 million, must be considered because it is a necessity. It makes no sense to build the Block Island wind farm without it.

Block Island currently gets its electricity from diesel-powered generators on the island. The price of power from those generators is notoriously high, with rates within the past two years climbing to three to four times what is paid on the mainland. The goal of Deepwater's wind farm is to take those generators offline and provide clean power at a cheaper price to Block Island.

But the wind farm has the capacity to provide more than enough power for the island, so any excess would be fed underwater to the rest of the state. Conversely, on some days, the wind will not blow, so Block Island would need a backup source of power. The cable would supply that electricity from the distribution system that serves the rest of Rhode Island.

National Grid estimates that the cost of the cable in the first year of the contract with Deepwater would be about $8 million and would then decrease in subsequent years. By passing that cost on to the consumer and not adjusting for a possible rise in the cost of fossil fuels, Grid calculated a figure of $16.20 in total additional costs to the customer.

At least they are honest when they say they will pass the cost along to the customer. The only way to know what the real cost to the customer is going to be is to tell us what percentage of the power, blah, blah blah. It's a lot of number crunching that would of course be boring here. If we find the answer to that question, we will post it on our website cleanhandsrecycling.com

In the mean time. Don't get us wrong. We love wind power! We love alternative energy. Unfortunately, we need to keep using our current, take advantage of us while you can, system until we get there!

Have a great day!