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Featured Letter: Deepwater Wind does nothing for Rhode Island’s economy

By C. Davis Fogg | May 30, 2014

 

Deepwater Wind’s much-publicized five-turbine wind farm at Block Island will do nothing for the Rhode Island economy. Zip, Zilch, Zero. It will lay an approximate $450 million increase in electric charges on consumers and businesses (I have averaged the available estimates) with no positive economic benefit over the 20-year life of the project. The money flows out of the Rhode Island consumers’ pockets to help fund DWW’s construction costs and profits. And, it’s approximately six times the cost of 38 Studio’s $75 million bond default.

How can this be, you say? DWW will build a facility to construct, assemble, and stage components for the wind farm at Quonset Point. It will, it’s said, bring $107 million in income to the state for the purchase of local services including labor, welders, electricians, pipefitters, painters, engineers, and services such as transport and food. So, doesn’t the $107 million increased economic activity offset some of the economic damage from increased electric rates? No. The $450 million hit on the consumer indirectly finances the DWW Quonset operation. It’s robbing Peter to pay Paul. A sleight of hand. It’s taking money out of one Rhode Islander’s pocket (say yours) and putting it into the pockets of those hired by DWW for the Quonset operation. There is no gain to the Rhode Island economy.

The DWW, Block Island project, including its Quonset operation, will decrease the purchasing power of Rhode Island households and businesses by the full  $450 million.

How could such a rotten deal be made? First, I’m told that Governor Carcieri, in the midst of the recent depression, a perpetually dismal Rhode Island economy, and close to the highest unemployment in the nation, needed to accomplish something that would employ people, show new economic activity, and burnish the governor’s reputation. The Speaker of the House, Gordon Fox, the now defunct Economic Development Corporation (EDC), and the legislature quickly approved the DWW deal.

And you might ask: “Did anyone really look at the ‘numbers?’” — the economic value of the project? They were available in a 2010 report written for EDC  by the consulting firm Levitan & Associates, Inc. in Boston. It’s economics 101.

The Governor also presented DWW’s project as a hub that would attract support and other new businesses. It would be a symbol of Rhode Island’s technology prowess; home of a “first”-the first deep water wind generation project in the US that would begin to establish Rhode Island’s reputation as a technology center.

Can we attract more wind-power related businesses to Rhode Island? The most attractive new business for DWW-associated activities at Quonset would be the manufacture of the turbines and blades themselves — high investment, high tech, high value products. There is disagreement on whether a turbine manufacturer would find the state attractive. In an interview, Steven King, Managing Director of Quonset Development Corporation, told me “it would take four to five major wind farm projects to justify turbine manufacture here, and that was unlikely.”

Jeff Grybowski, CEO of DWW, gave a contrary opinion in an email. He believes that Deepwater ONE, the future 150-200 turbine farm to be built in Rhode Island Sound, would put the state in a strong position to attract a turbine manufacturer. With Rhode Island’s lack of a trained workforce, high taxes, and being a bottom feeder (50th) in CNBC’s list of “Top States for Business” it is unlikely that we would be awarded such a venture.  On top of it, we have a nearby competitor. Massachusetts will build a facility similar to DWW’s Quonset operation in New Bedford to service the Cape Wind wind farm off the coast of Cape Cod.  They too have stated their intention to go after turbine manufacture and be the hub of wind farm supply for the Northeast. Being far more accommodating to business and, if it came down to a contest between Rhode Island and Massachusetts, we’d likely lose. Jeff Grybowski welcomes another source of supply “as Quonset is limited in capacity”

So, what to do about this? First, be proactive now. CommerceRI (CRI), the former Economic Development Commission, should be the leader in approaching turbine manufactures with DWW’s and QDC’s help. For starters, Siemens, which has announced plans to site a turbine facility in the U.S., and Alstom, who will be supplying DWW, should be approached quickly as a start. CRI should also define and go after support businesses if there are viable targets locally and beyond our borders.

Second, our Administration and legislature needs to become at least semi-literate in economics, finance and business when spending the public’s money on such ventures. At sometime in the future, the State will negotiate the electric rates for DWW’s 150- 200-turbine wind farm in Rhode Island Sound. Let’s hope they look at the numbers and strike a better deal for the consumer this time.

C. Davis Fogg lives Wakefield.

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