2018-06-21 / Front Page

Town Votes Down Energy Partnership

Rejects Lower Prices Due to Opt-Out Issue
By Christopher Allen

The Middletown Town Council took up the possibility of entering into a decades-long contract with the city of Newport and a third-party energy supplier in order to get a handle on rising electricity costs, during its June 18 meeting. But due to the long-term nature of the proposed agreement and the absence of a clear-cut opt-out clause, a majority of the councilors expressed reservations, voting down a resolution to certify the contract.

Further public discussion of the measure will be introduced at the next meeting on July 2.

“We are working with the community. We don’t know what’s going to change here in 20 years. Or what things are going to be like in 20 years,” council President Robert Sylvia said. “We could end up with someone manufacturing energy here [in Middletown].”

The resolution, if passed, would have authorized Town Administrator Shawn Brown to finalize the contract with NRG Energy, based in San Francisco. Only councilor Barbara VonVillas voted in favor of the resolution.

The contract, which was procured by energy consultant Clean Economy Development, LLC after a competitive bidding process that began in August 2017, would combine the public electricity uses of Newport and Middletown in partnership with NRG, which plans to build a large-scale solar panel facility in Rhode Island. NRG would finance and maintain the remote solar farm from which the municipality would purchase electricity at a fixed rate for the duration of the contract.

This concept, known as “remote net-metering,” would allow Middletown public officials to figure into the budget the cost of electricity going forward, which would be set at 10 cents per kilowatt-hour. Current rates hover around 16 cents per kilowatt-hour. These savings would be realized in the form of credits reflected on the town’s electricity bills. The town would remain on the grid, but with a lower overall bill.

According to Julien Dash, managing partner of Clean Economy Development, the fixed rate would allow Middletown to realize first-year savings of $129,000 for the town and an additional $87,000 for the school department. The estimated savings over the life of the contract would be about $3.5 to the school department and about $5 million to the town. “[Middletown will be] approximately 31 percent discount[ed] off what the town is paying now,” Dash said.

Sylvia wondered why the consultants had not explored linking up with communities or municipalities other than Newport.

“The town and the city has a really good working relationship, which allowed for co-procurement and co-managing of this [project],” Dash said. “As we start to add other municipalities and other bureaucracies, it starts to get a little convoluted.”

The consultant chose NRG from eight total bidders because, according to the document presented to the council, “[it is] the largest player in the U.S. Community Solar and Virtual Net Metering Market.”

Dash argued in support of the measure, pointing out that energy costs are projected to continue to rise and that a 20-year contract is current industry standard. “You don’t see net metering credit agreements shorter than that,” he said.

As the discussion progressed, council members expressed increasing skepticism, pointing out the rapid pace of technological development in green energy procurement. They wanted assurances that they could cut ties and find a new energy partner if a better deal came along down the line. Dash said a termination clause could be added, but that “The opt-out doesn’t come free.”

Council member Antone Viveiros questioned a business proposal that required no financial obligation on the front end. “There’s nothing for nothing,” he said.

Dash said that the town’s price came in the form of a 20-year commitment to purchase electricity credits from the developer. “It cost the town zero dollars out of pocket,” he said.

In the end, the council decided to wait so they may further discuss the terms of the contract structure.

“I’m not opposed to doing it. But I’m certainly opposed to doing it for that long,” council Vice-President Paul Rodrigues said. “I think there needs to be some type of opt-out clause. Things are going to change. I don't want to be locked in.”

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