By JIM BARON

PROVIDENCE — Gov. Donald Carcieri wants the Public Utilities Commission (PUC) to force National Grid to enter into long-term contracts with suppliers of renewable energy such as wind and wave power.

The General Assembly passed legislation earlier this year to accomplish the same purpose, but Carcieri vetoed it, saying the legislature’s version of the bill was too generous to National Grid, the dominant electrical utility in the state, did not require the renewable projects to be located in Rhode Island and favored costly solar energy efforts.
In a letter to the commissioners earlier this month, Carcieri said, “I believe that, besides being an environmentally responsible action, large-scale renewable energy can provide stable, cost-effective electric prices far into the future. However, to facilitate the construction of such project, it is necessary that National Grid be compelled to enter into long-term contracts on order to provide lower cost financing for these projects, such as the wind farms I have proposed.
A bill that consumed hours of debate over more than one day on the floor of the House of Representatives, the renewable energy legislation was ultimately passed by the House and Senate after several changes were made to what the administration originally proposed.
The legislation — sponsored by Senate President Joseph Montalbano and House Majority Leader Gordon Fox — would have allowed National Grid to collect a 3 percent surcharge on the long-term contracts, mandated that five megawatts of the 90 megawatts contemplated from renewable energy sources be from solar or photovoltaic projects, and did not require the projects to be based in Rhode Island.
In his veto message, Carcieri asserted that, as a publicly regulated monopoly, National Grid would incur no risk, nor have to invest any capital to reap the 3 percent bonus. That, Carcieri said, rendered “any bonus unnecessary and unearned.”
Carcieri spokeswoman Amy Kempe said the governor “understands there has to be some compensation” for the electric company, but said the 3 percent surcharge would just be passed along to ratepayers. She said his insistence on Rhode Island-based projects is to ensure that the state will benefit from the jobs these projects are expected to generate.
Attempts to reach the state energy office late on Monday were unsuccessful. 
The House and Senate are still mulling whether to return later this year for a special session to override Carcieri’s veto of numerous bills. By all accounts, the renewable energy legislation, which had high-powered legislative sponsors, would be one brought forward for an override if that session convened.
Meanwhile, Fox says the governor’s letter to the PUC brings the issue back to square one.
“Long term contracts have been taken up by the PUC already and less than a year ago the commission ordered a working group, including environmental organizations, renewable energy developers, National Grid and the office of energy resources to work out an agreement,” Fox said in a written statement issued last week. “The result was legislation that was introduced by myself and President Montalbano and passed overwhelmingly by the General Assembly with the support of the vast majority of members of the working group.  Unfortunately, the governor vetoed this legislation. 
“Going to the PUC again is not a solution to this issue,” Fox concluded.
Reiterating statements he made immediately after the governor’s veto, Montalbano said last week, “the governor fails to recognize the necessity of a payment to National Grid of 3 percent of renewable-energy after it is produced via the contracts entered into, once the projects begin. That payment offsets higher borrowing costs borne by National Grid under the plan.
“Such a payment is not only necessary,” Montalbano contends, “but is also a better deal than that negotiated in our neighboring state. The Massachusetts statute, signed into law on Tuesday, includes a 4 percent remuneration to National Grid for the same risk-taking.”
National Grid spokesman David Graves agreed.
“We would be extending ourselves into long-term contracts for projects that didn’t exist as yet,” he told The Times. “Doing so put us at risk in the markets when we go out to borrow money. We would have to pay higher interest.”
“It is not a stretch to say that this was potentially the most significant clean-energy legislation in Rhode Island history,” Montalbano said of the vetoed bill. “It is a culmination of many years of bi-partisan work by members of the Senate and the House of Representatives. It enjoyed the strong support of the environmental community.
PUC Spokesman Thomas Kogut said the commission will likely take up the governor’s letter at a public meeting in September.