Gov. Deval Patrick, who has been trying to strong-arm NStar [NST] into purchasing electricity from his pet energy project Cape Wind, announced today that the utility will buy 27.5 percent of the proposed offshore wind project’s electricity.
Cape Wind, which won a no-bid contract to put up more than 100 wind turbines in Nantucket Sound and has priced its electricity above market costs, has been dead in the water because it’s been unable to sell half of the energy it is expected to produce. National Grid has agreed to buy the other half.
The deal announced by Patrick today will hold electricity rates steady for four years and pass on $21 million in savings from a proposed $4.7 billion mega-merger of NStar and Northeast Utilities to customers.
“What we have today is a landmark agreement. It will protect ratepayers from rate increases now and into the future,” Patrick said. “It’s good for ratepayers, the environment and for our economy.”
NStar has also agreed to hire an independent accounting firm to examine its financial reports for the next three years, giving state utility regulators access and an “unprecedented level of transparency,” Patrick said.
If the Cape Wind project doesn’t break ground by 2016, NStar is under no obligation to buy energy from the wind project, but it will have to find other sources of renewable energy.
“Our agreement comes after close to a year of thoughtful consideration by state agencies and our companies to effectively balance a number of interests,” said NStar spokeswoman Caroline Allen. “We recognize Governor Patrick’s Green Communities Act sets important climate action goals and we feel having a diverse portfolio of renewable energy meets those goals in a way that is in the best interest of our customers.”
Patrick officials had thrown up repeated roadblocks to the proposed mega-merger of NStar and Northeast Utilities due to NStar’s refusal to buy the above-market Cape Wind electricity, the costs of which would be passed on to customers.
The latest deal, which is still subject to Department of Public Utilities approval, should smooth the regulatory process for the merger, which is also being reviewed by Connecticut state officials.
The DPU will hold a hearing, but not make a ruling until after Connecticut regulators make their own decision in early April.
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