Critics Say Wind Farm Rates Constitute Price Gouging

There are a lot of ways to deflect the criticism, but really none to refute it: The South Fork Wind Farm will charge higher rates for the power it generates — three to five times more than its parent company, Ørsted/Deepwater, will charge in nearby markets.

Despite complaints from all sides, freedom of information requests, and now a lawsuit, neither the Long Island Power Authority nor Ørsted have shed any light on the matter. East Hampton Town doesn’t even know the cost per kilowatt-hour ratepayers will be charged. In fact, though, every ratepayer in the PSEG/LIPA system will pay for the wind power generated, and the power will not be earmarked for East Hampton, as many at first believed, but for the entire grid.

In January 2018 , the LIPA board, at the insistence of Governor Andrew Cuomo, entered into a 20-year agreement to purchase all the power generated by the South Fork Wind Farm. The price per KW hour was redacted.

The cat-and-mouse game to uncover the exact cost has been played ever since, though the 23¢/KwH has been bandied about and never refuted by either side.

When requests for disclosure first poured in officials of Deepwater Wind, which has since been bought by the Danish firm Ørsted, said LIPA requested the confidentiality agreement.

LIPA’s special counsel for ethics, risk, and compliance, James Miskiewicz, wrote on August 31, 2017 in response to a query from a citizens’ group that “Deepwater Wind explicitly asked that the redacted information be treated as confidential, as defined by New York’s FOIL law.”

Miskiewicz said the price being paid constituted a “trade secret” that was a shield from public information requests, a decision backed by the U.S. Supreme Court.

Tom Falcone, the CEO of LIPA, told East Hampton Town when queried that price confidentiality is a normal occurrence: “Confidentiality provisions, which are standard for all our power purchase agreements, are for the benefit all of our customers,” he said.

But Wainscott resident Simon Kinsella, who is suing to force the state to disclose the rate, said Deepwater and LIPA wanted the price to be confidential because they knew other agreements being negotiated would indeed be public.

The discrepancies are jarring. The 400-watt Ørsted Wind Farm in Rhode Island charges 7.4¢/kWh, one-third the rate to be charged for the South Fork power. The Avangrid farm in Massachusetts is coming in at 6.5 ¢/kWh, and the Ørsted 1100-watt wind farm in New Jersey at 4.6 ¢/kWh, four times lower than New York ratepayers will pay. In addition, rates charged can rise over the years according to the terms of the contract.

While Ørsted will mine a rich vein in New York, long-term prices in the rest of the clean energy market are expected to drop to two and 1.3 cents, respectively, according to an analysis by Jeff McMahon in Forbes (July 1, 2019) titled, “New Solar + Battery Price Crushes Fossil Fuels, Buries Nuclear.”

LIPA and Ørsted/Deepwater have methodically recycled the same basic statement when queried about the cost of the wind power:

“LIPA has estimated that the South Fork Wind Farm, including the upgrade, will cost the average ratepayer between $1.39 and $1.54 per month when it starts operating in 2022,” said Meaghan Wims, a spokeswoman. “LIPA determined through a competitive process that this was the least-costly way to meet the need for new power supply on the South Fork, and that constructing other alternatives, including a new fossil- red plant, solar installations and upgrades to the existing transmission system, would have cost ratepayers more.”

Not true, Kinsella and other critics contend. “They simply deferred some of the costs,” he said. “You can’t just kick them down the road. Their numbers don’t add up.”

Ørsted recently reached out to the Citizens for the Preservation of Wainscott, a well-funded opposition group that wants to keep the power line from the offshore wind generators from landing in Wainscott. Instead, Ørsted is renewing the possibility that it can come ashore in Hither Hills (see accompanying story). Neither outcome addresses the issue of cost. “Ørsted is asking not to criticize it for price gouging and for its countless material misrepresentations,” Kinsella said.

rmurphy@indyeastend.com