Offshore Wind Wire

By Peter Brennan

The Massachusetts Department of Public Utilities today held the first of three hearings on an agreement between National Grid and Cape Wind for the utility company to purchase 50 percent of the power produced by the 130-turbine wind farm.

The hearings, held at Bridgewater State College, are ostensibly about the power contract but stakeholders from both sides were expected to attend and potentially turn the event into a referendum on the overall project.

In a statement, Cape Wind President Jim Gordon said that approval of the PPA would put “Massachusetts at the forefront of this emerging industry and provide National Grid customers with secure and stable-priced renewable energy.”

The company cannot obtain financing for the project until it receives approval of the PPA.

Under the terms of the contract, National Grid would purchase from Cape Wind 50 percent of the wind farm’s output — beginning in 2013 — for 20.7 cents per kilowatt hour. That price, which assumes existing federal tax incentives, would increase 3.5% per year during the 15-year term of the contract.  Based on its forecasts of what customers will pay for electricity in 2013, National Grid projects this will translate to a total monthly bill increase of $1.59, roughly two percent per month, for a typical residential customer who uses 500 kWh per month.

By agreeing to purchase 50 percent of Cape Wind’s output, National Grid will more than meet the three percent renewable energy long-term contracting requirement of the Green Communities Act of 2008.

Critics of Cape Wind note that the power generated by the project will be significantly more costly than current rates for electricity produced by burning natural gas or coal.  Additionally, a Boston Business Journal poll found that 58% of readers believe that Cape Wind would be the next Big Dig and ultimately be paid for by taxpayers, a view shared by Rep. William Delahunt (D-MA) as well as gubernatorial candidate and state treasurer Tim Cahill.

In March, Rhode Island regulators rejected PPA for an eight-turbine Block Island wind farm – between Deepwater Wind and National Grid – over concerns that it was too expensive and not commercially reasonable.  That contract included a purchase price of more than 24 cents per kilowatt hour.

Public hearings will be held in Nantucket and Worcester on June 21 and 22, respectively.