AG's Office Negotiates Rate Reduction In Cape Wind - National Grid Contract

By: Michael C. Bailey
Published: 08/06/10

National Grid customers will see a smaller increase in their monthly electric bills thanks to a deal struck between the Massachusetts Attorney General’s Office and Cape Wind.

Attorney General Martha Coakley announced last week that Cape Wind has agreed to cuts its proposed rates for electricity generated by the Cape Cod Wind Farm. Under the original terms of the pending long-term power supply contract with National Grid, ratepayers in the National Grid service area were facing a rate of 20.7 cents per kilowatt hour (cents/kWh).

Working with the AG’s office, National Grid, and the Massachusetts Department of Energy Resources, Cape Wind agreed to a new rate of 18.7 cents/kWh – a 10 percent reduction that will result in a $456 million savings over the original rate over life of the 15-year contract. Other provisions in the new agreement could lead to additional savings of $55 million.

The new contract, which is still awaiting approval from the Massachusetts Department of Public Utilities (DPU), retained the 3.5 percent annual rate increase from the original deal.

In a press release, AG Coakley called the new contract “a much fairer deal for ratepayers.”

“This agreement accomplishes two important goals – working to develop renewable energy, specifically off-shore wind in Massachusetts, and ensuring customers get the benefits of this project under a much fairer price than what was originally proposed,” AG Coakley said. “I want to thank all involved parties for their work in reaching this resolution, and I particularly want to thank Governor Patrick and Secretary Bowles for their work in helping to ensure that National Grid customers received a fairer deal under this proposed contract.”

In a press release James Gordon, president of Cape Wind, said he was “pleased” with the process.

“The parties constructively engaged to further the objective of delivering renewable energy, hundreds of green jobs and environmental benefits to the region,” he said. “With [this] agreement in principle, Attorney General Martha Coakley and Secretary Ian Bowles have helped put Massachusetts on a path to global leadership in offshore renewable energy and a transition to a better energy future.”

However, Audra Parker, president and CEO of the Alliance to Protect Nantucket Sound, said the new provisions “will not do nearly enough to protect ratepayers and businesses from the huge cost of the project. The fact remains that Cape Wind will still cost ratepayers more than $4.5 billion in additional energy costs. Overburdened taxpayers and struggling businesses simply cannot afford it.”

“Even after the Attorney General’s intervention, we still do not know the final cost of this project and businesses are lining up to say ‘no thanks’ and demanding to be left out of any contract that includes this overpriced and misguided project,” she said. “This state is already paying for one Big Dig. Let’s not build another.”

Cape Wind has refused to release publicly its cost and profit estimates – data that the AG’s office did obtain and review in making its decision.

The revised contracts will be submitted to the DPU, along with a request for final approval by no later than November 15, so that the developers can qualify for federal incentives available through the American Recovery and Reinvestment Act (ARRA).

The DPU will at the end of the month begin a series of hearings on the pending contract, and will receive testimony from 16 entities granted “intervenor” status, meaning that they are authorized to deliver formal testimony at the hearings.

The Alliance has already filed initial testimony charging that National Grid ignored its own policies and did not consider cheaper alternatives to Cape Wind when drafting their agreement.

All hearings will be held at One South Station in Boston through September.