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Cape Wind power contracts dispute heads to court on Thursday

BOSTON – Cape Wind opponents and critics of the project’s power purchase agreement with National Grid plan to head to court Thursday and argue the contract allows utilities to negotiate power agreemeMichael Nortonnts outside the competitive bidding process and sets a risky precedent.

Previewing their legal argument, the Alliance to Protect Nantucket Sound, backed by Associated Industries of Massachusetts and the New England Power Generators Association, will appear before the Supreme Judicial Court to challenge the Department of Public Utilities’ decision to approve the contract covering half of the proposed power from the long-planned offshore wind farm in Nantucket Sound.

“A decision by the court to allow the Cape Wind-National Grid contract to stand would sentence ratepayers to increased electric bills, a future of skyrocketing renewable energy costs, and give the green light for future renewable energy decisions to be based on political considerations rather than price,” alliance president Audra Parker said in a statement Wednesday.

The plaintiffs will also argue the agreement amounts to an unconstitutional restriction on interstate commerce “because lower-priced out-of-state renewable energy projects were excluded from consideration.”

Associated Industries believes the contract would add $1 billion in unnecessary charges to the electric bills of businesses and consumers in National Grid’s service territory. The business group expects the high court to rule in the case later this year or in early 2012. AIM says the power agreement was the first approved under the state’s Green Communities Act that allows utilities to sign long-term contracts for renewable power directly with generators, and notes that NSTAR has negotiated renewable power contracts at significantly lower costs than the National Grid/Cape Wind accord.

In November 2010, state regulators acknowledged the power prices under the contract were “expensive in light of today’s energy prices,” but approved a 15-year contract for Cape Wind to sell half its energy to National Grid, arguing the contract “is both cost-effective and in the public interest.”

The approval of the contract drew cheers from environmental groups.

“The power from this contract is expensive in light of today’s energy prices,” DPU commissioners wrote in their decision last year. “It may also be expensive in light of forecasted 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.”

In a statement Wednesday, House Minority Leader Brad Jones said he worried the power contract could backfire like millions of dollars in public subsidies poured into the now-bankrupt Evergreen Solar.

“It is a sincere fear of mine, that if this decision is not overturned by the Massachusetts Supreme Judicial Court, it will lay the framework for a very dangerous and costly precedent here in the Commonwealth,” Jones said. “Gone are the days of sweet-heart, closed door negotiations. Instead, we need to foster an environment of open door, competitive bidding on contracts that have direct, and potentially significant impacts on the wallets of the residents of Massachusetts.”

Cape Wind spokesman Mark Rodgers defended the DPU’s decision to approve the contract.

“If opponents’ flawed interpretations were adopted, virtually all clean energy purchases by Massachusetts utilities would go to remotely-located projects that create zero jobs in Massachusetts and can’t deliver power to the state,” Rodgers said in a statement. “By contrast, Cape Wind will create up to 1,000 new jobs in Massachusetts, will deliver its power directly to eastern Massachusetts and will confer upon the state the first mover advantage in the U.S. offshore wind industry which means that needed supply chain jobs get created here first. These are some of the reasons why the Department of Public Utilities, after hearing all of the arguments of contract opponents, approved the long term power purchase contract between Cape Wind and National Grid as both necessary, cost-effective and in the public interest.”

In June, the alliance applauded the SJC’s decision to deny a motion to dismiss evidence that the power purchase contract price levels were “two and a half times the cost of green energy from other providers,” according to the alliance.

Attorney General Martha Coakley on Wednesday ruled that an initiative petition proposed by Cape Wind opponents was not eligible for the ballot. The plan would have forced competitive bidding for energy contracts, and Coakley contended that it “impermissibly takes private property without compensation.”

In a statement in response to Coakley’s ruling, Rodgers said, “We applaud the Attorney General for striking down as unconstitutional a ballot question being pushed by the coal and oil industry and waterfront mansion owners that would have devastated the clean energy industry in Massachusetts and taken away thousands of jobs.”

Senate Minority Leader Bruce Tarr (R-Gloucester) reacted to Coakley’s ruling with a statement.

“Finding and developing sources of alternative energy is important, and doing so should not be tainted by bidding and procurement practices that avoid competition and transparency,” Tarr said. “The way to advance alternative energy is to make it practical and cost-effective, and not to isolate it from the economic pressures that families and employers in Massachusetts are facing every day when it comes time to pay their electric bills. While voters have been denied their chance today to provide transparency in energy pricing, my hope is that they will soon have an opportunity to support this goal through the legislative process and that today’s ruling will not discourage any of us from pursuing the right path when it comes to buying and paying for electricity.”