BOSTON – The Massachusetts Department of Public Utilities Monday approved a power-purchase agreement between National Grid and the developer of the wind farm proposed for Nantucket Sound.
The 15-year agreement between Grid and Cape Wind sets the initial price of electricity at 18.7 cents per kilowatt-hour in 2013, and rising 3.5 percent annually for 15 years. After that, National Grid has the right to a one-time extension of the contract for another 10 years on terms that could be below market rates, according to the Department of Public Utilities.
“This contract fulfills a statutory mandate under the Green Communities Act to facilitate the development of renewable energy generation, and it does so with strong protections for ratepayers,” DPU Chair Ann Berwick said in a news release. “It is abundantly clear that the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource, and that these benefits outweigh the costs of the project.”
Berwick said the contract would help insulate Massachusetts electric customers from volatile fuel prices that drive the cost of electricity. In addition, she pointed to environmental benefits of wind farms that release no carbon emissions.
But in approving the contract, the department acknowledged the electricity would cost more than that generated from more traditional sources. The department said that based on the range of forecasts the contract could increase the bills of National Grid residential customers by roughly 1.3 percent to 1.7 percent, and the bills of large commercial and industrial customers by roughly 1.7 percent to 2.2 percent.
“The power from this contract is expensive in light of today’s energy prices,” the order says. “It may also be expensive in light of forecast energy prices – although less so than its critics suggest. There are opportunities to purchase renewable energy less expensively. However, it is abundantly clear that the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource. We find that these benefits outweigh the costs of the project.”
The contact covers half the electricity the wind farm is expected to generate. The department earlier rejected a contract pitched by Cape Wind to sell the remaining power to an unspecified buyer. The DPU indicated that it would review any contract for the rest of the electricity “on a more expedited basis,” since the issues surrounding such a contract have now been fully examined in the just-concluded process.
Critics of the Cape Wind project have previously vowed to appeal an approval of any contract.
For its part, Cape Wind hailed the approval.
“Massachusetts is now in a position to become a global leader in offshore wind power creating thousands of new jobs and a more secure, hopeful energy future,” Cape Wind President Jim Gordon said. “Today’s approval validates that Cape Wind is a good value delivering clean energy without all of the associated costs of fossil fuels.”
Cape Wind is racing to construct the first offshore wind farm in North America. The proposed farm – which received federal approval earlier this year – would include 130 turbines.
