House Majority Leader Gordon D. Fox, D-Providence, left, talks with Rep. Peter Lewiss, D-Westerly, before the start of yesterday’s session at which Fox’s alternative-energy legislation was hotly debated.

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The Providence Journal / Connie Grosch

PROVIDENCE — Rhode Island lawmakers yesterday approved a bill that would give the state’s major power supplier, National Grid, a financial bonus for entering into long-term contracts to buy alternative energy, such as wind and solar power, despite acknowledgements the move may raise electricity bills.

After hours of debate spanning two days, Rep. John Loughlin, R-Tiverton, asked this question: “At the end of the day, what is this bill going to mean to the electric bill that my constituents receive in the mail every month from National Grid? Is this going to mean that there is going to be a lower amount on that bill or a higher amount?”

The bill’s sponsor, House Majority Leader Gordon D. Fox, D-Providence, responded: “Short term, it might be a small increase. Long term, we don’t know.”

So, “the only thing we know for sure is that it is going to mean more money on that electric bill?” Loughlin asked. “In the short-term there might be a small increase,” Fox repeated. But, “in the long-term, cost savings are indicated as well as savings to our lives in terms of greenhouse emissions and global warming …”

“If there is going to be long-term savings, then why are we protecting big business and telling our ratepayers … you are going to pay more?” Loughlin persisted. “Let’s let big business take the risk. They’re going to reap the profits.” So it went for hours.

In the end, the bill cleared the House on a 57-to-6 vote after a two-day series of votes in which a handful of Democrats joined the small House Republican bloc in trying to reduce or eliminate the amount the bill allows National Grid to recoup from its customers “for accepting the financial obligation of the long-term contracts.”

Under the bill, that equates to 3 percent of the “actual annual payments made under the contracts for those projects that are commercially operating.” The measure now goes to the Senate, which backed a matching version earlier this week.

While no estimates were provided on the potential rate impact, Fox said: “This is one of the moments where you need to decide what direction is this state going to go in…. Yes, we are facing $4-a-gallon gasoline, energy costs are going through the roof. Are we going to say … let’s continue to do that. Let’s continue to hope and pray that it’s not going to get any worse? Or are we going to decide with what may be a $1 a month investment in this type of renewable energy, that we’re going to break the cycle?”

“So bury your heads in the sand if that’s what you are going to want to do ... and leave that other bodily part fully exposed to Venezuela … or Mother Russia,” Fox said. “I will not be kneeling to Mother Russia or Venezuela today. I am looking to the future…. This is what it is going to take to get this done.”

The bill is considered by some to be the most significant piece of energy legislation moving through the General Assembly this session.

It would require National Grid to enter into “commercially reasonable” long-term contracts with renewable-energy developers to purchase their electricity. That requirement would give assurance to prospective developers that there would be a buyer for the electricity produced by the project. Such assurance, the developers have said, is needed to borrow money to build renewable energy projects.

The Public Utilities Commission would regulate the awarding of contracts and would decide what is commercially reasonable.

The company would be required to buy at least 5 percent of the power it delivers to Rhode Island, and the contracts would last 10 to 15 years, or even longer with approval by the Public Utilities Commission.

Supporters of the bill have said it would bring about the development of new renewable energy projects in the region, reduce the state’s dependence on electricity generated by traditional fossil fuels, stabilize electricity prices and create new jobs in the state.

“By supporting new projects at every scale –– from family farms, to municipal scale projects, to large-scale developments like wind farms — every new renewable energy project built in Rhode Island over the next five years is likely to take advantage of this legislative package,” said Matt Auten, an advocate for Environment Rhode Island.

But Rep. Laurence W. Ehrhardt, the North Kingstown lawmaker who led the opposition, read aloud portions of a statement from the PUC’s Division of Public Utilities and Carriers that, he said, was never shared with members of the House committee that vetted the bill.

While “the division generally supports this idea of facilitating financing for renewables as proposed by this bill,” the letter said the PUC could find “no justification for the incentive payment” to the electricity-distribution company (EDC) since “there is no risk to the EDC or any uncompensated cost that is evident to us that would justify an additional payment to the utility,” and the “incentive payments will be passed on directly to ratepayers and increase the cost of their monthly bills.”

Commenting on an earlier version of the bill, the state’s utility regulators said: all costs of acquiring energy already “are fully covered in the EDC’s rates. The 4 percent incentive is another subsidy the ratepayer will be asked to pay solely for the benefit of the shareholders of the EDC.”

On and off the House floor, advocates justified the ratepayer subsidy, using widely different reasons.

Rep. Elizabeth Dennigan, D-East Providence, said: “This is a very, very important national security issue because we are involved in a horrific war where the centerpiece [issue] is oil. We all have a responsibility … to do what we can to develop our own energy resources so we can tell the Middle East and other areas of conflict, we don’t need you. We are developing our own energy.”

Matt Auten of the advocacy group Environment Rhode Island denied that renewable energy would drive up electricity costs, describing the bill instead as a “prudent response to skyrocketing prices for electricity [and natural gas] because it will lock in a fixed price not tied to polluting fossil fuels for a portion of Rhode Island’s electric needs.”

National Grid spokesman David Graves said that these contracts “shows up as a long-term debt on our books; something that impacts our company’s ‘credit’ when we go in to borrow for our own purposes.”

He said these contracts would affect the cost of borrowing throughout the whole company, not just National Grid’s Rhode Island division.

Graves said it wasn’t possible to calculate how much money the company might receive from that payment without knowing what electricity will cost when the contracts are negotiated.

According to calculations by The Providence Journal, National Grid would receive at least $2.8 million a year if it could purchase the required amount of power at a rate of 11.5 cents per kilowatt hour. (That is the rate National Grid is seeking to charge for electricity as of July 1.)

More than a dozen lobbyists and power company executives had a role in the discussions that produced the bill, including Frank McMahon representing National Grid, Chris Vitale representing the developers of the proposed Cape Wind project in Massachusetts, and former Lt. Gov. Richard Licht, representing Ridgewood Power, according to a spokesman for Fox.

tbarmann@projo.com