The Block Island Times

More details on LNG proposal needed, says EUTG

By Stephanie Turaj | Jul 03, 2013

In May, the Block Island Power Company revealed it is considering a move to liquified natural gas (LNG) as part of its fuel source to produce energy on Block Island.

Members of the town Electric Utility Task Group (EUTG) have researched the gas, and seem satisfied about the safety of using LNG on the island.

However, they still had questions about the proposed contract that the power company is negotiating with Clear Energy, the LNG supplier.

“My fears of its safety have been satisfied,” said EUTG member Bill Penn at the Friday, June 21, meeting. “What are the implications to ratepayers?”

According to Clear Energy Chief Operating Officer Evan Coleman, this switch would save ratepayers money.

Coleman said switching to LNG would be 20 percent to 30 percent less expensive for the Block Island Power Company, or an estimated $300,000 to $500,000 in savings per year.

However, EUTG members wanted a way to prove this, and asked for a copy of the proposed contract, but BIPCo and Clear energy cited concerns about privacy and the impact releasing the contract would have on competitive pricing.

Instead, Block Island Power Company co-owner Cliff McGinnes Sr. asked for a list of questions, which the company could then respond to.

EUTG chair Barbara MacMullan said that if the only word to back up the savings is from Clear Energy, “that just sort of puts us in a difficult position.”

Coleman responded that the group should be comforted by “the fact that this contract is approved by the Public Utilities Commission and also [Block Island Power Company] has been living in this community and has operated in this community for some 30, 40 years. I don’t think they would contract for something that would hurt their neighbors.”

The potential savings from the switch to LNG would be passed on directly to the island ratepayers, according to the Block Island Power Company.

BIPCo currently uses diesel to power its generators on-island. But the company is considering a switch so that 50 percent of its energy production will be created by LNG. The other 50 percent will remain diesel.

Comments (1)
Posted by: Sam Wells | Jul 03, 2013 12:01

My understanding is that it's all in how the fuel contract is structured, and it would be good to have some clarity on that.  Basically you're buying compressed natural gas that has been super-cooled and liquified as LNG.  Natural gas prices are now trending upwards after sinking to very low prices of about $2-3 a therm.  However, my (limited) understanding of LNG is that it is tied to the price of of crude oil, which is why LNG companies want to expend in the US export market - they can sell cheap gas for very good profits.  Being that hydrocarbon are a volatile market, one would want to see if the contract had an fuel adjustments (spot market, annual contract, 5-year renewable with inflators, etc.).  One would need to know the "fully loaded rate" including delivery, which I suspect could be by ferry on a semi-truck with a hazardous permit.  All LNG tanks have "boil off gas" as it slowly warms, so the safety side of the equation shouldn't be trivialized, either.  When they haul LNG by a super-tanker ship, all traffic is stopped within a mile of the ship and entire channels are closed.

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