LIPA CEO Reveals Wind Power Rates

Tom Falcone, the CEO of Long Island Power Authority, defended the price his company will pay for wind power from the South Fork Wind Farm should that project indeed become a reality.

In an exclusive one-on-one with The Independent Thursday, November 1, Falcone said rates will fall as LIPA acquires more and more offshore power, thus offsetting the relatively high price agreed upon for the farm.

He also acknowledged the parent companies of the project — Eversource Energy and Ørsted, formerly Deepwater Wind — have a third location under consideration to land the cable that will bring the power ashore from the wind turbines 35 miles out.

The Independent has revealed preliminary plans to abandon Beach Lane in Wainscott as a landing site, and relocate another alternative in Hither Hills further east of another wind farm being considered in the same area. The cable would then run first to the Long Island Rail Road right-of-way, and then to the recently-expanded PSEG facility in Amagansett on Old Stone Road. Eventually the line would make its way to the Wainscott substation.

Falcone’s mission was clearly to promote the $14.1 per kilowatt hour rate. He says LIPA will pay for the wind power. Some critics say it’s too high of a cost, while others question how the amount was derived and charge it is inaccurate.

“The 2015 request for proposal presented a need to buy clean, renewable energy,” Falcone said, adding solar energy costs three times as much now as it did then, and that wind will likely follow suit. “We have the added benefit of injecting it where we really need it.”

Simon Kinsella, a Wainscott resident who sued to force the state and LIPA to reveal the contracted cost for the wind power, said the numbers Falcone and LIPA used to generate the cost are faulty.

“We are constantly looking to purchase more,” Falcone said. “You do not want bidders to know” what rates you are willing to accept.

Kinsella said an accurate contract valuation is $24.6/kWh assuming an average inflation rate of two percent.

“LIPA’s valuation of $14.1/kWh relies on a fictional inflation rate of 6.5 percent for the next 20 years,” he said. “LIPA’s claim is grossly undervalued.”

Falcone countered, “The adjusted rate for inflation is just a way of comparing apples to apples. It’s the same rate New York State Energy Research and Development Authority uses, levelized and recalculated.”

A more pertinent number, Falcone said, is the average cost the wind power will add to the typical ratepayer’s bill, which he said is between $1.39 and $1.57 per month. Ratepayers across the entire PSEG grid share the cost, not just East Hampton users.

LIPA is positioned to react to changes in the offshore wind market as they develop, Falcone said. For example, a Bureau of Ocean Energy Management review on a proposed Martha’s Vineyard wind farm has hit a snag because of its impact on the nearby fishery.

“It’s hard to predict if the review will take longer,” Falcone said, but added it was something LIPA couldn’t control.

Ørsted has never publicly revealed a third location to make landfall with the cable from the offshore wind turbines. The Independent has reported it will also be in Hither Hills, where the first alternative to Beach Lane in Wainscott was sited. From there it will use the Long Island Railroad right away to run to the PSEG Amagansett substation, and then run from that newly renovated facility there to the Wainscott substation.

Falcone acknowledged Ørsted is seeking “a settlement” to short circuit the New York State Article 7 review of the project by bringing concerned parties on board for the discussion and to hopefully reach a consensus.

Falcone said “minor upgrades” will be required for the Amagansett facility, and PSEG will make them.

More exciting to LIPA is the future of wind power as it relates to the company, Falcone said. An increasing number of wind turbines in the ocean will translate to cleaner energy and decreasing costs that will reinvigorate the LIPA power supply with renewable, affordable energy.

As for the much-ballyhooed peak time power shortage on the East End, Falcone has repeatedly said the company can easily deal without the use of wind power should the projects under consideration be indefinitely stalled or withdrawn. Line upgrades are already underway.

The LIPA system is a big one — 1.1 million customers, 2400 employees, 189,000 transformers, and a $3.6-billion annual budget. In 2014, LIPA turned over the maintenance of the grid from National Grid to PSEG.

Should the PSEG system from Wainscott to Amagansett indeed come into play when wind power hits land, more complications exist. The town sued PSEG and LIPA for expanding the facility in Amagansett without local zoning approval, and the town recently joined a group of citizens in a suit to force the utility entities to bury the so-called “big poles” along the route.

rmurphy@indyeastend.com