BOSTON – In many ways the decade-long battle surrounding the proposed Nantucket Sound wind farm has always been a stand-in for a much larger debate over the future of the nation’s energy policy.
But after countless arguments for and against Cape Wind, perhaps nowhere have the basics of the broader dispute been more distilled than in a makeshift hearing room above Boston’s South Station.
The state Department of Public Utilities is midway through two weeks of hearings to determine whether a contract to sell power from the 130-turbine wind farm to electric utility National Grid is cost-effective. Yesterday a witness for the project’s primary opposition group, the Alliance to Protect Nantucket Sound, faced an onslaught of questions from attorneys for Cape Wind, National Grid, project supporters and state officials.
Jonathan Lesser, an economic consultant from New Mexico, argued that the power pact did not pass his “bright line test” for cost-effectiveness based on the deal’s high monetary cost. But Cape Wind supporters countered that regulators must consider other benefits such as reduced emissions of carbon in their analysis of the contract.
Under an agreement reached with Attorney General Martha Coakley’s office, Cape Wind would sell half the power from its turbines to the utility for 18.7 cents per kilowatt-hour. When spread across the utility’s ratepayers the power would cost about $1.50 extra each month for the average residential customer who buys electricity from National Grid.
The utility services Nantucket, but Cape Cod and Martha’s Vineyard get their power from other sources over electric lines operated and maintained by NStar.
“In my opinion neither the original (contract) nor the amended (contract) are cost-effective,” Lesser said near the outset of his cross-examination by a phalanx of lawyers.
David Doot, an attorney for the firm Day Pitney, representing National Grid, asked Lesser if he considered himself an expert on the state’s Green Communities Act, a 2008 law intended to encourage the development of renewable energy projects.
Lesser said he had never heard of the law until he was hired by the alliance earlier this year.
Doot questioned Lesser’s credentials and pushed him on his testimony filed prior to the hearings.
Cape Wind will increase the need for costly improvements to transmission lines, or ancillary services, in the New England electric grid, Lesser said.
“Have you performed any analysis for the price?” Doot asked.
No, Lesser said, adding that he relied on forecasts from National Grid and other sources.
Cape Wind attorney David Rosenzweig asked Lesser if he had determined a “trigger point or threshold” amount of wind energy power that would require additional transmission services and if he had performed an analysis of a gap that witnesses for National Grid have testified will exist between renewable energy projects required under state policies and laws and those that are being built.
The idea that the DPU should consider the scarcity of renewable energy projects in its determination of whether the contract for Cape Wind’s power is cost-effective is “faulty logic,” Lesser said.
In his written testimony Lesser criticized another witness for failing to consider available renewable projects that exist in northern Maine and eastern Canada, Rosenzweig said.
“Are you saying there are no transmission bottlenecks in New England that can affect the transmission of electricity north to south?” Rosenzweig said.
“No, I am not,” Lesser responded.
“So you agree there will be a cost associated with alleviating transmission bottlenecks but you did not run analysis of those costs on your own?” the attorney said.
“That is correct,” Lesser said.
Cost vs. resources
New England customers will see their electricity prices decline because Cape Wind’s power will be considered zero cost for the purposes of the energy market, Rosenzweig said. Wind power, regardless of how much it is sold for, suppresses prices overall because of how the regional market is managed.
An NStar customer on Cape Cod, for example, would see their bills drop because of Cape Wind selling its power into the market, Rosenzweig said.
“They may see a price suppression temporarily but in the long run because artificial price suppression destroys competitive markets they will pay more,” Lesser countered. “Simply put, subsidizing resources, subsidizing anything, results in longer-term higher costs.”
The men also sparred over so-called alternative compliance payments for renewable energy credits that make up about a third of the cost of the Cape Wind National Grid deal.
Lesser’s bright line test for when a project should not be considered cost-effective falls around 16.8 cents per kilowatt-hour, Rosenzweig said.
What if a resource was just slightly more than that price, he asked.
“If it was that close to the threshold I would say it depends on what other resources are being examined,” Lesser said. But in the case of Cape Wind the price is so much higher that it should not be considered cost-effective, he said.
Sue Reid, an attorney for the Conservation Law Foundation, asked Lesser whether the future passage of legislation that put a price on carbon would change his analysis.
“You expect those regulations to be costly don’t you?” she said. “Yes I do,” Lesser said.
Referring to several opinion pieces that Lesser authored, Reid also questioned his contention that the state did not consider other environmental benefits as part of alternative-compliance payments and his stand on human-induced global warming.
“Is it fair to say, Dr. Lesser, when it comes to human-induced climate change, that you are a skeptic?” she said.
“Yes, I think that’s fair to say,” he said.
The DPU hearings are expected to continue through next week. The agency could make a decision on the contract as early as November.
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