November 15, 2010

State set to flip switch on wind power deal

By Patrick Cassidy, Cape Cod Times, 15 November 2010

The state Department of Public Utilities is expected to decide this week whether the proposed Nantucket Sound wind farm is a good deal for consumers.

Cape Wind and National Grid had asked for a decision by today but sources with knowledge of the proceedings said the agency’s ruling is likely to come later in the week.

The DPU first took up the question of whether Cape Wind is cost-effective after National Grid agreed in May to buy half the power generated by the project’s 130 turbines.

Since that time, the agency has received an avalanche of filings about the deal from opponents and supporters. In September, the three-person state board responsible for reviewing electricity and gas rates held several weeks of hearings on the case.

“I’ll expect a very lengthy order because it was such a lengthy case with a lot of evidence,” said National Grid deputy general counsel Ron Gerwatowski. “They have numerous issues that they need to address.”

The power pact initially called for the utility to buy Cape Wind’s power and other commodities for 21.7 cents per kilowatt-hour, but a deal hashed out by Attorney General Martha Coakley lowered that price to 18.7 cents.

The cost of the power will rise 3.5 percent per year over the 15-year life of the contract.

When spread among all National Grid’s ratepayers, the cost of Cape Wind’s power is expected to add $1.50 to the bill of an average residential electrical customer using 618 kilowatt-hours per month in the first year of operation.

Seeing what sticks

While the DPU will likely either approve or reject the contract it must also rule on several outstanding motions by opponents of the project.

The Alliance to Protect Nantucket Sound has asked the DPU to dismiss the case entirely and has also asked that the record be reopened so it can admit more evidence.

“I’ve never seen it happen like that at the end of the case,” Gerwatowski said of the motion to dismiss. He said the DPU would likely handle a ruling on the request in its final order.

The move to reopen the record appears to be the Alliance “throwing everything against the wall to see what sticks,” Gerwatowski said.

Cape Wind’s opposition continues to press its case before the DPU and in court that the project is overpriced and a misguided effort to address the need for renewable energy.

“If this is based on facts and the economic burden that is put on ratepayers, then it should be a flat-out rejection of the contract,” said Audra Parker, president and chief executive officer of the Alliance. “If it’s based on politics then we’ll see.”

The fate of Cape Wind is likely to be decided by a judge even if the DPU approves the contract.

Briefs were due Friday in a consolidated group of lawsuits by the Alliance, the town of Barnstable and the Martha’s Vineyard/Dukes County Fishermen’s Association against the U.S. Department of Interior for its decision in April to approve the wind farm, Parker said. The Alliance and Barnstable Municipal Airport officials have challenged the Federal Aviation Administration’s approval of Cape Wind in federal appeals court, she said.

On Friday, a Barnstable Superior Court judge will hear arguments on a motion for an injunction by the Alliance to force the state to turn over documents covered by a public records request.

In addition Cape Wind must secure final permits from the Army Corps of Engineers and the Environmental Protection Agency, Parker said.

“It’s not a done deal,” she said.

Confident of approval

Cape Wind officials are confident they will secure any remaining permits and expect the DPU to approve the contract with National Grid, said company spokesman Mark Rodgers.

The company is sure the outstanding legal challenges will be decided in its favor, especially in light of a string of legal victories over the nearly decadelong battle over the project, Rodgers said.

If the DPU decides in favor of the contract Cape Wind will continue its efforts to sell the second half of the power from the turbines, he said.

“Once we feel that we’ve completed the process of selling off our power then we’re going to work hard on project finance,” he said, adding that financing the project will take place at the start of 2011.

While Gov. Deval Patrick’s administration and others expected that Cape Wind would need to begin construction by the end of this year to access a necessary grant, the company now expects construction will begin before the end of next year, Rodgers said.

“That was something that we haven’t been focused on in quite some time,” he said of the cash grant.

Cape Wind officials do not anticipate the deal with National Grid being affected if construction does not begin by the end of this year, Rodgers said.

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