BIPCo's stability as fuel costs rise

BIPCo’s stability as fuel costs rise

“This topic is so complex that most people don’t understand it enough to comment on it,” resident and resident David Lewis said at a Block Island Utility District meeting on July 28.
Lewis was talking about net metering, the mechanism by which rate payers who generate solar energy are credited for their excess production, but he could have been referring to any of several topics related to the island’s power supply.
The complexity of the problem is another confusing term: avoided cost. As more and more people want to add solar arrays to their homes, creating a policy to compensate them without putting the company and other price payers at risk is difficult.
Rhode Island has a law that limits the amount of production through solar installations by three percent from the “peak” amount of energy the power company needs to deliver. For Block Island Power, this peak is reached in the summer, usually on a day when excessive heat prevails. So far, this year’s peak has been reached on July 22 with a load of 4.92 MW.
For Block Island, that three percent was reached a few years ago and there was a ban on people who could sign up for net metering.
Last year, the Rhode Island General Assembly passed legislation that allows the Block Island Utility District and Pascoag Utility District to set their own percentages, but that also means that new tariffs must be developed for additional customers. This new tariff also had to be approved by the Rhode Island Public Utilities Commission.
In pursuit of the new tariff, the utility district chose to build the existing solar arrays under the old net metering tariff. New solar producers will be compensated at an avoidable cost, which is less than the full retail price people get net metered. The main difference is that under cost avoided, the customer still pays most of the transportation fee – the utility cost to maintain its network of poles, wires, transformers, line crew salaries and plant costs. Under net metering, the customer does not contribute to the transportation costs, so the payers of the remainder are mainly supported by them.
PUC did not like the disparity in treatment, and asked the utility district to reconsider the old tariff. And they’re not the only ones unhappy with it.
During the public comment portion of the meeting, Stephen Record said that the new tariff removes all “incentive” for the homeowner to install solar, as there has been no return on investment. “It’s not a start,” he said.
It has been observed that some people receive grants from the Block Island Solar Initiative to help them defray the cost, but need to meet certain income constraints.
What someone might call “an incentive, while others would call it a subsidy,” said Barbara McMullan, chair of the Utilities Board.
“I don’t feel any urge to support people,” Lewis said. “I don’t expect others to fund my personal charities. I probably represent many other people on the island.”
Summer resident Peter Kenoy said he was “kind of new to this discussion”, but was considering adding solar in his home on Korn Neck Road, even though he found it “expensive”. With climate change getting hotter every summer, he said he believes the board should try to do “everything possible to encourage solar energy.”
“That’s not a theoretical goal,” McMullan said. “This is a real goal. Should the policy be to support solar energy? When we have 1,800 members… we have to balance that for everyone.” With the three percent cap raised, utilities are now nearly 10 percent, she added. “This triples” the amount of solar energy, she said.
“We want as much solar energy as we can get,” Wright said. “How can we get more?”
One of the current limitations of solar energy is the inability to conserve it. If it is not used during the day it is produced, it is wasted. But, that may change with the addition of a utility-sized storage battery. Having one option, or at least exploring the option has been in the utility area board for a while now. It is a rapidly changing industry, both technically and in terms of cost.
Wright reported that he received an offer from the Solar Energy Initiative to contribute 75 percent of the estimated cost of $38,000 to hire a company to submit a request for proposals for a battery storage system and to evaluate the results. “We’ve benefited from the solar initiative before” by donating a rooftop solar array at the power company’s plant, Wright said.
For the cost of the battery system, there is grant money available for a fraction of the cost. Wright said the Solar Initiative will allocate $250,000 in funds similar to the grant, if received. “In a year to 18 months, we could have a utility-sized battery storage system,” Wright said.
After discussion, the Board voted to move forward with the agreement to engage Fractal Energy Storage Consultants to issue and evaluate RFPs.
This wasn’t the only good news Wright got. “It’s like Christmas,” he said. “When I had my meeting with [the anonymous donor behind the Solar Initiative] “That’s great but I want to do something even greater,” he said. In doing so, Wright announced that the energy company would receive a new electric bucket truck — and it would be only the eighth truck in the United States.
A regular bucket truck costs about $300,000 these days. One EV is just under $620,000. “I don’t think I’ve been very excited since I came here,” Wright said. “I can’t thank you enough,” he told Solar Initiative Program Director, Wade Ortell, who was at the meeting.
“All price payers should be grateful for this truck,” said Evan Carey, a BIPCo employee. He added that the new truck could be higher than the old one, making it safer for ship workers who won’t actually have to climb to the top of the upper poles anymore. “It’s not just a game. It’s unbelievable to have a truck like that.”

New Energy Supply Contracts
The Block Island Utility District has avoided a bullet when it comes to the effects of higher fuel prices. The district enters into contracts to purchase electricity from power producers who feed it into the New England power grid.
Since decommissioning diesel generators that were burning 1 million gallons of fuel annually, the utility area has entered into a series of contracts to source electricity, developing a portfolio that uses natural gas, solar, and hydro power. Each contract for a specified period of time at a specified price.
For the Block Island Power Company, its largest contract is for natural gas, the price of which, of course, has increased significantly. Still, Wright was lucky, or wise enough to secure the current contract for natural gas before a big price hike. Another challenge is determining how much power is required. To contract on more than one utilities wasted money. Contracting for less is risky because the gap can mean that the facility has to buy its energy
Spot Market.
Wright secured new contracts with Shell North America on July 6, priced at $65.25 per megawatt-hour, up from $49.90 in the previous decade. However, just after July 6, the purchase price of electricity on the spot market in New England rose to $600 per megawatt-hour.
“I am very pleased that we acted when we did and at the pricing we got from Shell,” Wright wrote in his boss’s report. “If we had waited another week, the result would have been different.”
Despite the higher price, BIPCo is seeing savings coming from other regions. The network charges a “capacity fee” to each facility based on annual peak usage, but those costs have fallen in the past two years. But more importantly, the power company’s recent voltage conversion project reduced line losses by about a third, so the company doesn’t need to buy the same amount of power to meet its needs.

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