The Block Island Times

Featured letter

May 28, 2012

To: the Editor—
The recent financial troubles of video game maker 38 Studios and its political and financial relationship to the state should be a shot across the bow for the Deepwater Wind near-shore Block Island wind farm and the risk of shortfalls in future resources to dismantle the wind farm. To quote a senior state representative of the RI General Assembly commenting last week: “That deal [38 Studios] was put together during the spring of 2010 by many of the same players who, at the same time, were also pushing the Deepwater transaction. I fear the economic judgment was no better.”
The Town of New Shoreham must take responsibility to determine, independently of Deepwater Wind and the Coastal Resources Management Council (CRMC), with fact-based, non-political, professional and independent analysis, the future cost of dismantling the Block Island wind farm and follow a rigorous process to guarantee those funds exist in 20 years. Public transparency must be provided — there should be no ambiguity with respect to the future assets and path to the future obligation of the developer. There will be no such thing as being too conservative on this issue — the risks are extraordinarily high.
Politics has driven many steps of the process for this project to this point, not fact-based analysis. That’s foreign to a lot of us. Witness the Special Area Management Plan (SAMP), which purported to be a science-based effort to determine, among other things, a site for the Deepwater Wind project. There may have been good work done by the SAMP but the Block Island site was pre-selected for the wind farm long before the SAMP was complete. The de facto circumvention of the state Public Utilities Commission regulatory process for the Deepwater/National Grid power purchase agreement (PPA) for political reasons has been well documented.
It is critical that politics not get in the way of thorough and fact-based analysis of de-commissioning costs and a proper process for guaranteeing funds exist in 20 years to dismantle this project.
Why not rely on Deepwater Wind?
Deepwater Wind is conflicted, so we can’t rely on its efforts and cost estimates alone. It owes a responsibility to its shareholders from a fiduciary perspective, not Block Island, as much as it might say otherwise. Deepwater Wind will most likely not be in existence in 20 years, the expected life of the wind farm and end of the PPA with National Grid. Or Deepwater will have sold the project to another developer. It has already raised red flags as a result of failing to file annual reports with the state and allowing its PPA with National Grid to expire.
Why not rely on the CRMC?
The CRMC is the regulatory body that claims oversight of decommissioning issues because the project is in state waters, but the CRMC does not have the expertise and experience and it can be subject to politics, too, as we’ve seen with the Champlin’s Marina case. This bears repeating. The CRMC does not have the expertise to effectively manage something of this magnitude.
Why not rely on the state or other off island resources?
There is not and will not be private sector wealth or taxpayer resources in this state to provide funds to de-commission the wind farm if it is not done properly by Deepwater Wind or its parent DE Shaw. A recent example is the Jamestown Bridge. The state had no resources to dismantle it. The U.S. Coast Guard for years called it a hazard to navigation and it was a blight on the area. It ultimately cost $22 million to dismantle, and most of the funds came from the federal government.
What do other energy facilities and the well-known pension issues in this state have to teach us?
I’ve helped manage de-commissioning assets. That doesn’t make me an expert, but it makes me understand it’s a high risk proposition to do it properly. As evidence of the risks involved, there are about 25 nuclear power plants in this country that lack sufficient de-commissioning funds for various reasons, but mostly because of poor planning and a lack of accountability. Or witness the pension issues Rhode Island and others face. Properly funding a pension is essentially the same procedure as properly funding de-commissioning assets.
While all of us have responsibility, those who have supported and championed the wind farm project for years now owe a greater accountability on this issue. That includes especially the Town Council and the Electric Utility Task Group.
The Town Council needs to hire an independent professional, paid by the town, to determine the proper process inclusive of accruals, bonding in the initial years of the project, attaching liability past Deepwater Wind LLC to DE Shaw or National Grid, estimated funds needed and other issues. It then needs to present this body of work to the CRMC and other regulators. It is not critical to go into detail here as these and other issues can be addressed separately. What is critical is that the town begin this now as the applications are being submitted shortly and state approvals will happen quickly, likely by year end.
I am happy to help in any way.
Mike Hickey
Cooneymus Road

The views expressed are my own and not associated with any other organization.

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