New Haven Register (Sunday) (New Haven, CT)
Cost overruns, investigations plague state pier
It’s one of the largest development projects in the state, with the stated goal of building an offshore wind power hub servicing not only Connecticut but the region, potentially shaping the future of renewable energy in the northeast, creating jobs and boosting economic development for decades.
Critics say ballooning costs, nearly triple the original estimate with more increases expected to come, have placed too high a burden on taxpayers, arguing the project has allowed a small group of large companies to have outsized control over imports and exports, all under the shadow of state and federal investigations.
Thirty or so miles off the shore of Long Island is a planned wind farm where, eventually, hundreds of windmills will reside. Based on the current plan, those windmills will be brought to and assembled at the Admiral Harold E. Shear State Pier in New London, known colloquially as the state pier.
The first wind project, expected to be operational this year, will consist of 12 turbines supplying energy to 70,000 homes on Long Island’s south fork. Two years later, another 65 turbines are expected to provide energy to 350,000 homes in Connecticut and Rhode Island. Another 84 turbines should go operational that year, providing energy to 600,000 homes in New York state.
The state pier project itself
The state pier site will be a staging ground for those offshore wind farms, windmills arriving in a few large and perhaps hundreds of smaller pieces. They’re to be put together at the state pier, almost to completion.
“Each windmill will go out in four or five pieces: One tower standing upright, three blades and the nacelle,” said David Kooris, president of the Port Authority board.
Those pieces will get put on a
barge and then transferred, as many as six windmills at a time, to the off-shore wind farm for final assembly. But a ship large enough to carry six windmills, standing upright does not actually exist yet in North America.
There are ships in Europe large enough and created for the same purpose, but Kooris explained that the federal Jones Act excludes them.
“Once you put the foundation in the water offshore, it becomes a domestic port and you can’t run foreign vessels between them,” he said.
So a ship is being built for the purpose, in Texas, and New London will be its first port of call. The ship will be named Charybdis, after the whirlpool monster of Greek mythology.
“They actually stand those tower sections on Charybdis upright, so there will be six towers standing upright on that vessel,” said Andrew Lavigne, the Port
Authority’s manager of business development and special projects. “It’s going to be incredible.”
Much of the work that is ongoing at the state pier is preparing the port for a ship of that size, and the dock itself for the weight of windmills weighing many thousands of pounds. What looks now like a field of dirt is in fact a highly engineered, steel-reinforced concrete pad, capable of bearing loads up to 5,000 pounds per square foot.
“The prior capacity was 1,000 pounds,” Lavigne said. “So it’s a five-fold increase in load-bearing capacity.”
The concrete pad is reinforced with tubular steel cages, like pipes, sunk into the seabed. The design requires a construction worker to be lowered down into each cage for welding, but it’s a pier, so construction is at the mercy of the tides.
“It’s wild,” Kooris said. “Three hours ago when the tide was lower, there might have been someone in one of these cages doing work and then the bell goes off, they gotta climb out.”
Costs overruns and revenue
The project was originally supposed to cost $93 million, but costs have ballooned to $255.5 million. Some of that cost — $77.5 million, according to the state Port Authority — has been borne by Eversource and Orsted, the power companies that will run the wind farms once they are built.
When asked if there would be another increase in cost, Kooris said he expects one more which will be bonded by the state, potentially pushing the total cost of upgrading the pier to $300 million, though Kooris declined to say how much that increase might be.
“We expect one more increase, and we’re working through that with our contractors,” he said. “We hope to be in a position to finalize things in the coming weeks and months, you know, by the end of February. I think what we can say at this point is, we know whatever else that we may ask the legislature for is going to have to go hand in hand with an additional commitment from our private partners.”
Kevin Blacker, a former Green Party candidate for U.S. House and a vocal opponent of the state pier project, said the “excessive costs are a result of bad judgment,” likening the project to home construction. ”If you build a house on a bad foundation, I don’t care what you do, it’s never going to be right.”
“First it was going to be $93 million, and then it went to $157 million. At $157 million, they put the Connecticut taxpayer on the hook for all overruns, so the taxpayer is responsible for everything over $157,” he said. “It went to $204 million. Then it went to $235.5 million. Then it went to $255.5 million.”
When that last injection of $20 million was approved by the State Bond Commission, commission member Rep. Holly Cheeseman of East Lyme said “I wonder if someone can offer some reassurance that this is the last time we are going to be asked to increase funds for this project.”
“This is the final tranche of funding,” Kooris said in May of last year though he more recently said additional funding would be necessary to complete the project.
Ulysses Hammond, Port Authority executive director, when asked how much more money would be required, said, “That’s all in the negotiation right now.”
According to Kooris, the initial cost estimates were based on the design, but when the project broke ground there were “unforeseen conditions.”
“There are hundreds and hundreds of piles that have been driven into the earth, some of them almost 200 feet deep and six feet in diameter,” he said. “When you do that you encounter things, big rocks, bedrock and elevations that were a little bit different than anticipated.”
“This isn’t your typical highway bridge project. It’s really something that the state has never done before,” he said.
In 2019, the Port Authority granted a 20-year concession agreement to a company called Gateway as the port operator. When construction is complete and the port begins its actual work, Gateway will manage operations. Gateway in turn has a sublease with Eversource and Orsted, granting those power companies preferential use of the port for the purpose of wind energy.
Gateway is supposed to pay the state a minimum of $500,000 per year in rent, plus a minimum of another $500,000 in what Lavigne called a “minimum annual guarantee,” a number which should increase depending on Gateway’s business.
Orsted and Eversource will also pay the state $2 million a year when operations begin.
Gateway is, however, paying the state nothing during the construction period, Kooris said.
“During construction, since we were losing the revenue from Gateway — they’re not going to pay us not to operate it — Orsted and Eversource gave us $1.25 million a year during construction,” he said.
Why New London
There are only three deepwater ports in Connecticut: Bridgeport, New Haven and New London.
When choosing the site to serve as an offshore wind power staging ground, the first factor is distance and New London is the closest to the lease areas where those windmills will be constructed. Bridgeport is the furthest away.
Then there are the questions of restrictions and available land.
Kooris explained that when considering a port, you must consider restrictions, both “horizontal” and “vertical.” Vertical restrictions are things like bridges that might prevent shipping to and from the port. Horizontal restrictions are things like “hurricane barriers or jetties or breakwaters,” Kooris said.
New Haven’s port is land-poor. “Every square inch in New Haven is used up for cargo or for petrol or oil,” Kooris said. “The only available land in New Haven is north of a movable bridge.”
Bridgeport’s port has unused land, but there are horizontal restrictions at the breakwater, and while Kooris said it’s not a “deal killer,” it would make the project more complicated. “They haven’t been dredged in 50 or 60 years,” Kooris said.
The U.S. Navy’s presence near the harbor means the New London port is regularly dredged to make way for military vessels.
Blacker said that “Bridgeport is so silted in that there is not the depth of water to bring cargo ships to Bridgeport.”
New Haven does not have the same silt issue, but New London is, Blacker said, better situated.
“New London’s channel is deeper, wider, straighter and maintained by the Navy,” he said. “We’re closer to the open ocean being at this end of the sound, and it’s just a superior location.”
Salt and scrap
The state pier is owned by the state Port Authority, a quasi-public agency, but operation of the port is handled by a company called Gateway. Before Gateway, a different company, Logistec, operated the port. At the time, the port was multi-use, importing and exporting materials and textiles from around the world.
Gateway also operates out of New Haven, which gives a single company a large presence at the state’s two most valuable deep-water ports. That, critics argue, creates something akin to a monopoly, forcing anyone who wants to bring goods in or out of the state’s ports to deal with Gateway.
David Waddington is a co-owner of DW Transport and Connecticut Scrap, which takes scrap steel and processes it for export to both domestic and international foundries. He said a deep-water port should be thought of as a public utility.
“The uniqueness of the ports, it’s like a state forest,” he said. “It should be regarded as a state park.”
Waddington believes that with one company controlling the state’s only two deep-water ports (not counting Bridgeport, which is not a viable option), that gives them control over imports and exports.
“For a state-owned facility it’s a little odd,” he said.
Gateway is not only a port operator, but also a trucking company, according to their website: “Gateway owns and operates every type of truck needed to move every commodity we handle on and off dock.”
That, Waddington said, makes it more difficult, and more expensive, for other companies.
“It basically makes them the only player in the state of Connecticut for the export of steel,” Waddington said. “They took all the medium guys out of the loop.”
Waddington does export steel out of New Haven, which again is also operated by Gateway, and he does not believe anyone involved is nefarious in any way: “None of these people are bad people.”
But he does think that, “There should be an allowance for smaller companies.”
“If you want to avoid a huge monopoly, the state should do their job,” he said. “The state should not have locked up the state pier. It’s not right.”
“Cargo in the state of Connecticut and the northeast region moves by a combination of truck, rail and marine vessels; marine vessels call ports all over the east coast to deliver cargo, some of which is handled outside of Connecticut and comes into the state via truck or rail,” said Gateway spokesman Justin May, in a statement. “In addition, marine vessels include tug and barge activity, which call multiple locations throughout Connecticut and the east coast.”
“Clearly we don’t have a monopoly on imports/ exports in the state of Connecticut,” he said.
But Waddington points to trucking company DVRN and its owner, Steve Farrelly, who used to import tons of road salt from Egypt to Connecticut, distributing that salt to municipalities and large entities across the state: “Seventy-six DOT garages all over the place, every major university, hospitals,” Farrelly said.
Under Logistec, Farrelly was able to lease space at the New London pier, using that as his staging point, unloading the salt from the ships and trucking it directly to where it would be sprayed over roads in winter.
Gateway, however, did not wish to renew his lease. Though he was granted extensions and offered another location, the shift in operators meant Farrelly’s cost of business went up considerably.
If a company like DVRN wants to use the ports, Farrelly said, they have no choice but to do business with Gateway, and if Gateway has a relationship with a competitor, then there is no option other than rail or truck, both options are more expensive and less efficient.
“I think it’s antitrust,” Farrelly said. “It saddens me to think that somebody can do this so blatantly.”
Federal investigations
The project, and the Port Authority, has been dogged by controversy.
In 2018, a company called Seabury Capital was paid $700,000, including a $523,000 “success” fee for its part in the selection process of a port operator. Three months earlier, Henry Juan III of Greenwich, a managing director at Seabury, resigned from the Port Authority board.
Seabury later agreed to pay a $10,000 penalty for gifts to employees and a Port Authority board member in 2017 and 2019 including National Hockey League tickets and overnight stays at a
Greenwich club.
Lawmakers raised questions when Kiewit, the Nebraska-based construction firm hired to renovate the site, later recommended itself for million-dollar subcontracting contracts.
Meanwhile, there are both state and federal investigations ongoing into the Port Authority.
A grand jury has been empanelled, seeking information from every company involved in the project, but Kooris said that, “While there are ongoing investigations from the Department of Justice and the attorney general’s office around past activities at the port authority from 2017, 2018, to our knowledge, none of that has anything directly to do with the project that’s here.”
When asked if they were concerned about the investigations, if they had the potential to halt the project, Hammond said “We’re concerned but not constrained.”
“We are concerned about whatever is under investigation, but it does not constrain us,” he said. “We’re focused on the future of this project. We’re focused on the promise of this project. So that’s where that’s where our focus is. Our focus is now on finishing this project. Seeing those turbines rolling out of New London.”
Kooris echoed Hammond, saying, “We don’t have any reason to believe that the investigations are intrinsically tied to the infrastructure activities.”
“I can’t wait for the day that they’re no longer hanging over our head, but not out of fear of what it means, certainly not for any of us as individuals or for the project,” he said. “Just because if someone did something wrong several years ago, I want them to be held accountable so that we can move on.”