State energy officials are renewing their efforts to delay a merger of NStar and Northeast Utilities until more information is provided on how the partnership would help meet the state’s green-energy goals.
The Massachusetts Department of Energy Resources filed a brief Wednesday renewing its motion to stay proceedings before the Department of Public Utilities on the merger, according to officials in Gov. Deval Patrick’s administration. Patrick is a strong supporter of the proposed Nantucket Sound wind farm and his administration has been accused by opponents of the controversial project of holding the $18 billion merger hostage unless the companies agree to buy half the power from the 130 turbines Cape Wind Associates, LLC wants to build in federal waters.
NStar has so far declined to buy power from Cape Wind although the company’s chief executive officer Tom May did not rule out the possibility in an interview earlier this month with the Times.
National Grid has already agreed to buy half of the power from the project at an initial cost of 19 cents per kilowatt, adding about $1.50 per month to the bill for the average residential customer.
But opponents argue the price will increase dramatically and would cost businesses and their customers much more. The cost of the 15-year pact will increase annually by 3.5 percent and includes an incentive for the utility equal to 4 percent of the contract’s annual value.
The brief filed Wednesday called for the DPU to include conditions in any approval of the merger that require the companies “to demonstrate concrete, verifiable and enforceable reductions in their reasonably foreseeable climate impact,” according to a press release from the state’s Executive Office of Energy and Environmental Affairs.
The conditions called for in the filing would require NStar to enter into a 15-year contract for new wind energy equal to 2 percent of the utility’s electric load as of a year ago, or about 130 megawatts. Cape Wind’s so-called “name plate capacity” is 468 megawatts with an average production of 170 megawatts.
“It is not clear what the order will say when (the DPU) approves it,” May said about his expectation that the merger would be approved by the DPU.
Cape Wind’s opponents have argued that NStar has been able to contract with land-based wind energy projects that offer far less expensive power than Cape Wind’s power.
Cape Wind and its supporters contend that the project is necessary to spur the offshore wind energy industry and to fulfill the state’s renewable energy goals.
In addition to the requirements around wind energy, the state proposed conditions on the merger that include increased energy efficiency savings, the inclusion of 10 megawatts of solar energy projects in the utility’s portfolio over the next decade, the introduction of an electric vehicle pilot program and that NStar adopt so-called “decoupled” rates that encourage greater energy efficiency.
Also Wednesday state Attorney General Martha Coakley recommended that the DPU impose a five-year rate freeze for NStar gas and electric customers as a condition of the merger.
“The merger of these two public utility companies has the potential to lower costs for customers through increased operating efficiency, but ratepayers need to see the results of those savings in their bills,” Coakley said in a prepared statement. “These merger conditions are necessary to ensure that the companies’ shareholders don’t simply pocket the increased profits and guarantee that any benefits of the merger flow back to customers.”
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