BOSTON – The fight over whether the country’s first offshore wind farm should be built off Cape Cod moves this week to a Boston hearing room, where the project’s future turns on one question: Is the price of the electricity produced by the spinning turbines a good deal?
On Tuesday, hearings begin at the Massachusetts Department of Public Utilities, which will decide whether utility National Grid’s 15-year contract to buy half the turbines’ power is good for ratepayers.
Teams of lawyers will present and cross-examine witnesses over 12 days of hearings that have been previewed in hundreds of pages of written testimony.
The hearings, the latest battlefield in a decade-long fight over Cape Wind, is unprecedented for the DPU. It’s the first long-term power deal the agency has considered since passage of a 2008 law that requires utilities to find more renewable sources of energy.
“There so much animosity,” said DPU executive director Timothy Shevlin. “So it’s not really routine.”
Rejection of the contract would be a huge blow to Cape Wind. The 130-turbine project, planned for Nantucket Sound, is estimated to cost at least $2 billion. To attract needed financing, Cape Wind must show investors that it has customers for its power. The company also must begin construction by the end of the year to qualify for key federal tax credits, and it can’t do so if it doesn’t secure the contract.
“This is an important moment,” said Matt Pawa, an attorney for the pro-Cape Wind group, Clean Power Now. “And the question being presented to DPU is, ’What’s the right price for that kind of power?’”
To project opponents, the question about Cape Wind’s cost effectiveness is answered in the black and white terms of the contract.
National Grid has agreed to pay 18.7 cents per kilowatt hour in the first year of Cape Wind’s operation, with a 3.5 percent annual cost increase. The starting price is more than twice what the utility pays today for power from nonrenewable sources.
“It’s undeniable that Cape Wind is not cost-effective when you compare it to market rates, or you compare it to other renewable energy,” said Audra Parker of the Alliance to Protect Nantucket Sound, a Cape Wind opponent.
Robert Rio of the business group the Associated Industries of Massachusetts, which opposes Cape Wind, said there’s no reason consumers should have to pay a premium for Cape Wind’s power when the utility can get sufficient, cheaper renewable power from other regional sources, such as land-based wind.
National Grid estimates its deal with Cape Wind will cost the average residential ratepayer about $1.50 a month, but Rio disputes that number and said larger customers would take major monthly hits.
“Our real issue on Cape Wind is that this is the most expensive renewable power on the planet,” he said. “And, frankly, there is plenty of other renewable power.”
But National Grid deputy general counsel Ron Gerwatowski said there’s a looming gap between the sources of renewable energy and the renewable power needed for distribution under the state’s Green Communities Act. The 2008 law requires electricity suppliers to get 15 percent of the power they sell from renewable sources by 2020.
Cape Wind is the only large-scale renewable energy project even close to operation that could put a dent in that gap, Gerwatowski said.
“If we’re going to take those requirements seriously, then you need to have offshore wind and you need to have Cape Wind in the mix,” he said. “We can’t let Cape Wind pass us by.”
Project advocates also say Cape Wind’s benefits can’t be measured only by the contract’s dollars and cents. They cite the benefits of a new U.S. offshore wind industry, pollution prevention and climate change mitigation.
“What’s the Arctic ice cap worth?” Pawa asked. “Would you pay $1.50 a month to save the planet?”
The hearings before a three-member DPU commission begin with testimony from Cape Wind representatives. Witnesses continue through at least Sept. 22, including representatives of the alliance, National Grid, and environmental groups.
Shevlin said the commission aims to make a decision by the end of November. It also will consider a nearly identical contract that could be used in the future by other utilities to purchase the other half of Cape Wind’s power. Any deals by other utilities would still need DPU approval.
The commission is made up of two Democrats and one Republican who were appointed by Ian Bowles, Secretary of the Executive Office of Environmental Affairs, with the approval of Gov. Deval Patrick. Both the governor and Bowles are enthusiastic supporters of Cape Wind.
“Do I believe that we’re going to get a fair hearing? I don’t know,” said Parker. “But we go through and present the facts. What is the other option?”
The DPU functions as an independent agency and has bucked the Patrick administration, including in this case, when the DPU allowed 14 parties full legal standing in the review as “intervenors” – far more than the administration wanted.
In a statement, Bowles said he was confident the DPU commissioners would “conduct a fair, impartial proceeding.”
“The DPU is an independent regulatory agency that has a proven history of reaching its own conclusions under Gov. Patrick,” he said.
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