Offshore Wind Wire

By William Morgan

The Massachusetts Department of Public Utilities (DPU) approved a memorandum of understanding on Tuesday between National Grid and Cape Wind to begin negotiations on a power purchase agreement for the proposed wind farm.

On December 2, Massachusetts officials announced the signing of the MOU as a promising step toward building the 130-turbine offshore project.  The DPU must sign off on the memorandum and approve any power purchase agreement that results.

National Grid reached a deal with Deepwater Wind last month to buy the power produced by an eight-turbine project in state waters off Rhode Island.  The company agreed to pay 24.4 cents per kilowatt hour for the power produced by the wind farm.  That agreement is being reviewed by the Rhode Island Department of Public Utilities.

The Massachusetts DPU approved the Cape Wind memorandum over the objections of The Alliance to Protect Nantucket Sound — a local opposition group that has fought the Cape Wind project for years.  The Alliance submitted formal comments protesting the lack of an open bidding process and the projected eventual market price of the electricity produced.

A slew of organizations submitted comments in favor of the MOU, including the Massachusetts Attorney General’s office and local trade unions.  Several organizations (including Cape Wind itself) submitted comments encouraging a quick approval to enable construction before the end of 2010, which would help the company qualify for federal incentives.  The Attorney General’s office, the Conservation Law Foundation and Cape Wind estimated that the federal incentives could lower ratepayer costs by 30 percent.

The DPU cautioned, however, that the approval of an actual power purchase agreement could prove far more contentious.

“Most issues raised by commenters concern whether the Cape Wind project will satisfy the policy objectives … or whether any resulting long-term contract between National Grid and Cape Wind will be cost-effective,” the approval order read.  “The Department need not address the issue of cost-effectiveness or other contract requirements …  the appropriate time to address relevant substantive issues is if and when National Grid submits a proposed contract for Department approval.”