Massachusetts Groups Appeal Cape Wind Power Deal (USA)

A Massahusetts business group on Monday appealed a power purchase agreement between National Grid and the 130-turbine Cape Wind that state regulators approved last month.

The Associated Industries of Massachusetts, which represents about 6,000 businesses in the state, argues in a brief filed before the state Supreme Judicial Court that the contract between the utility and offshore wind farm is too expensive and the costs are wrongly allocated to all distribution customers, including those who buy supply competitively.

The business group argues that National Grid should have put the contract out to bid and opened it to out-of-state developers. In addition, it argues that the deal exceeds state limits on how much power a utility can buy under long-term contracts.

Under the PPA, National Grid would buy half of Cape Wind’s output at 18.7 cents/kWh with a 3.5% annual escalator over 15 years. The cost does not include a 4% fee the utility receives for signing the contract, AIM said.

The Department of Public Utilities acknowledged when it approved the contract November 22 that Cape Wind’s power is expensive, but DPU said the projects’ benefits exceed its costs.

The Nantucket Sound project, is in the public interest, because no other renewable resource in the region matches Cape Wind in terms of size, proximity to large power load, capacity factor and the advanced stage of permitting, the DPU said.

The project also is expected to help the state meet its renewable portfolio standard.

In raising the issue of seeking out-of-state bidders, AIM echoes commerce clause challenges that TransCanada brought against other long-term deals that utilities in Massachusetts and Rhode Island made.

AIM emphasized it does not oppose Cape Wind because of is location, nor has it challenged any of the project’s permits, but the group said Cape Wind’s power is priced at three times the market price for electricity and twice the cost of any other source of renewable power.

(platts)

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Source: platts, December 14, 2010