National Grid 2013 Annual Report Download - page 29

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The 2009 law also required Narragansett to solicit proposals for a small scale renewable energy generation project of up
to eight wind turbines with an aggregate nameplate capacity of up to 30 MW to benefit the Town of New Shoreham that
also included a transmission cable to be constructed between Block Island and the mainland of Rhode Island. On June
30, 2010, Narragansett entered into a 20-year amended power purchase agreement with Deepwater Wind Block Island
LLC (“Deepwater”), which was approved by the RIPUC in August 2010. Narragansett is currently negotiating with
Deepwater to purchase the permits, engineering, real estate and other site development work for construction of the
undersea transmission cable. Narragansett intends to file an unexecuted copy of the purchase agreement with the
Division for review and consent in late 2013, following which Narragansett will make a filing with the FERC to recover
the costs associated with the cable in transmission rates.
On July 28, 2011, the RIPUC unanimously approved a 15-year power purchase agreement with Orbit Energy Rhode
Island, LLC for a 3.2 MW anaerobic digester biogas project. This is the first power purchase agreement that Narragansett
submitted to the RIPUC for review as a result of Narragansett’ s annual solicitation process that was approved by the
RIPUC on March 1, 2010. Following Narragansett’ s second annual solicitation, Narragansett executed a 15-year power
purchase agreement with Black Bear Development Holdings, LLC on February 17, 2012, for a 3.9 MW run-of-river
hydroelectric plant located in Orono, Maine. Narragansett submitted the contract to the RIPUC on March 19, 2012. The
RIPUC approved the contract on May 11, 2012. On August 2, 2013, the Company executed a 15-year power purchase
agreement with Champlain Wind, LLC for a 48 MW land-based wind project in Carroll Plantation and Kossuth
Township, Maine for a fixed bundled price of $78.00 per megawatt hour (“Mwh”). The Company filed the contract with
the RIPUC on September 3, 2013 and responded to four record requests the RIPUC issued to the Company during a
hearing held on October 9, 2013. The RIPUC will hold an open meeting on October 25, 2013.
In June 2011, Rhode Island established a 10% carve out to the 90 MW of long-term contracting requirement for
renewable energy to be used for long-term contracts for smaller distributed generation projects over a four year period
from 2011 through 2014. From 2011 through April 2013, Narragansett conducted four distributed generation enrollments
and awarded contracts for a total of approximately 18.4 MW of project nameplate capacity. In early July 2013, the
Rhode Island legislature passed an amendment to state law that extended the deadline for meeting 100% of the long-term
contract capacity from December 30, 2013 to December 30, 2014.
Energy Efficiency
On December 21, 2011, the RIPUC approved the annual Energy Efficiency (“EE”) plan for the calendar year 2012,
which included a portfolio of electric and gas energy efficiency programs along with the associated budgets and electric
and gas EE program charges effective January 1, 2012. The calendar year 2012 electric and gas EE programs contained
spending budgets of approximately $61.4 million and $13.7 million, respectively, which are to be collected through the
approved EE program charges. On November 2, 2012, Narragansett filed its EE plan for the calendar year 2013 with
proposed electric and gas spending budgets of $77.5 million and $19.5 million, respectively. The 2013 annual plan also
contains a newly proposed combined heat and power (“CHP”) program pursuant to a newly enacted amendment to the
Rhode Island least cost procurement statute to support the development of CHP projects through energy efficiency. The
plan consists of enhanced incentives and a proposed tariff amendment to assure that customers who receive incentives
under the CHP program will continue to pay a fair share of the costs of the distribution system when the CHP unit is
offline. The plan was approved by the RIPUC and reflected in rates effective January 1, 2013. On March 5, 2013,
Narragansett filed a Petition with the RIPUC for approval of a $15.9 million incentive package to Toray Plastics
(America), Inc. to install a 12.5 MW CHP system at their manufacturing facilities in North Kingstown, Rhode Island.
This is the first incentive package offered pursuant to the 2013 EE Plan and the new law. The RIPUC approved the
incentive package on June 20, 2013. The Company will file its 2014 annual program plan on November 1, 2013.
Brooklyn Union and KeySpan Gas East (the “New York Gas Companies”)
Rate Matters
The New York Gas Companies are subject to a rate plan with a primary term of five years (through December 31, 2012)
that remains in effect until modified by the NYPSC. Base delivery rates are based on an allowed ROE of 9.8%. An
earnings sharing mechanism in the rate plan is triggered if annual earnings result in a ROE that exceeds 10.5%. Earnings
above this threshold are shared with customers. Brooklyn Union recorded excess earnings sharing of $35 million related
to the rate year ended December 31, 2011.