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State Supreme Court broadens review of Cape Wind approval

The Massachusetts Supreme Judicial Court will determine whether Massachusetts energy regulators should reconsider their approval of the Cape Wind/National Grid contract in light of evidence that other utilities bought renewable power at less than half the cost of the proposed offshore wind farm.

A single justice of the SJC ruled yesterday that the court would review the Department of Public Utilities’ denial of a request by opponents to re-open the Cape Wind/National Grid case. Opponents sought to revisit the decision after NSTAR and other utilities used competitive bidding to find renewable power at between 9 and 11 cents per kilowatt hour, versus the 25 cents per kilowatt hour over 15 years provided in the Cape Wind deal.

The decision means that the state high court will hear two separate cases on the DPU approval of the Cape Wind agreement – one challenging its decision not to re-open the case and consider the additional evidence; and a second filed by AIM and others seeking to overturn the entire decision.

AIM has appealed the approval by the Department of Public Utilities (DPU) along with the Alliance to Protect Nantucket Sound, TransCanada Marketing and the New England Power Generators.

“Had the DPU considered these lower-priced contracts, customers would have saved hundreds of millions of dollars. Now, the SJC will have the opportunity to determine the importance of this information,” said John Regan, Executive Vice President of Government Affairs at AIM.

Opponents asked the DPU to re-open the case because the results from NSTAR and other utilities became public only after state regulators had already approved the contract between Cape Wind and National Grid.

The results from competitively bid contracts for renewable power obtained by other utilities is important because it shows that lower priced alternatives – with the same environmental attributes of Cape Wind – were available while the National Grid/Cape Wind discussions took place. The evidence could have made a material difference in the analysis of the cost-effectiveness of Cape Wind and discredits the statements of National Grid’s witnesses and testimony. Cases may be reopened if material information becomes available.

AIM is appealing state approval of the Cape Wind/National Grid agreement because it will add $1 billion in unnecessary charges to the electric bills of businesses and consumers in the utility’s territory.

The 15-year deal approved in November will saddle ratepayers with the highest power price ever negotiated in Massachusetts and tens of millions of dollars in commissions that National Grid will receive for signing the contract with the offshore wind project.

The agreement was the first to be approved under a provision of the Green Communities Act (GCA) that allows utilities to sign long-term contracts for renewable power directly with generators.

AIM argues in its appeal that the DPU’s approval of the National Grid/Cape Wind deal was “arbitrary, capricious,” an “abuse of discretion and not otherwise in accordance with the law.” The agreement sets a dangerous precedent for allowing utilities to negotiate expensive power agreements outside of the competitive bidding process and to allocate the costs of those contracts unfairly to commercial and industrial customers.