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The state’s highest court has upheld the power-purchase agreement between National Grid and Cape Wind, dealing a legal blow to critics of the offshore energy project’s costs. The developer called the ruling a “big boost” to clean energy.
The state Department of Public Utilities approved the 15-year electricity rate deal between the utility and the energy developer in November 2010, saying the project’s benefits outweigh its costs.
“Our review of the record indicates that there was clearly sufficient evidence on which the department could base its conclusion that the special benefits of (the Cape Wind power deal) exceeded those of other renewable energy resources, and we uphold the department’s conclusion that approval of the contract was in the public interest,” Justice Margot Botsford stated in the SJC’s written opinion released today.
The DPU approval prompted an appeal before the Supreme Judicial Court late last year.
The trade groups Associated Industries of Massachusetts and New England Power Generators Association, along with opposition group Alliance to Protect Nantucket Sound and out-of-state energy company TransCanada, each filed challenges, claiming violations of the state’s Green Communities Act, high costs to consumers and lack of competitive bidding.
But the SJC said the DPU had the authority to approve the contract.
“The department permissibly determined that the environmental benefits … will accrue to all National Grid customers, and it is therefore appropriate to require all customers to share in the costs of acquiring these benefits, in accordance with departmental precedent,” Botsford wrote in the 34-page ruling.
Cape Wind president Jim Gordon said in a statement: “This decision provides a big boost for creating up to 1,000 jobs and providing Massachusetts with cleaner air, greater energy independence and a leadership position in offshore wind power.”
National Grid agreed to buy half of Cape Wind’s power at 18.7 cents per kilowatt-hour for the first year. That amount would increase 3.5 percent annually for 15 years.
The electricity will most likely cost ratepayers between $420 million and $695 million above market prices for the life of the contract, according to the DPU.
“We continue to maintain that state regulators fell short of their responsibilities to consumers by approving this agreement at time when other utilities were finding plentiful renewable electricity at less than half the cost of Cape Wind,” said AIM president Richard Lord.
Cape Wind secured federal permits in April but is still trying to line up a buyer for the other half of the power the 130-turbine project would generate.
The likely buyer is Nstar, but so far that utility has refused to connect with Cape Wind despite pressure from the Patrick administration and threats to its merger with Northeast Utilities. Nstar recently lined up “green” energy from land-based wind farms.
Audra Parker, head of the Alliance to Protect Nantucket Sound, called the SJC ruling a “blow to ratepayers, businesses and municipalities.”
“The good news is the increasingly clear reality that Cape Wind will never be built,” Parker said in a statement. “Cape Wind has been denied FAA approval, has been denied critical federal loan guarantees, has no utility willing to buy half its power, and cannot find investors. Those facts alone render this decision moot.”
Richard Sullivan, Gov. Deval Patrick’s energy and environmental affairs secretary, said the DPU’s original ruling “assured that ratepayers could get renewable power at a fair price”
“Today the SJC confirmed that decision-making process,” Sullivan said in a statement. “Cape Wind will create local jobs, reduce our dependence on foreign sources of energy, and is poised to kickstart a new U.S. industry by making Massachusetts the site of the country’s first offshore wind farm.”
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