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Sparks fly over new Cape Wind deal with NStar  

Credit:  By Patrick Cassidy, Cape Cod Times, www.capecodonline.com 31 March 2012 ~~

Power from the proposed Nantucket Sound wind farm will cost the average residential electricity customer on Cape Cod and Martha’s Vineyard an extra $1.44 per month in the first year of a contract filed Friday with the state by NStar, according to the utility.

Statewide, Cape Wind’s power will cost NStar distribution customers an additional $940 million over the 15-year life of the pact, according to documents the company submitted to the state Department of Public Utilities.

The DPU is expected to approve the deal, which covers 27 percent of Cape Wind’s power. It largely mirrors one the agency approved between Cape Wind and National Grid for 50 percent of the power from the 130-turbine project.

NStar will buy Cape Wind’s power for about 19 cents per kilowatt hour in the first year of the contract. The price of power will rise by 3.5 percent each year of the contract.

These costs are what the utility pays for the power. When mixed in with power the utility buys from other sources, the additional cost of Cape Wind’s electricity ends up being less than a quarter of a penny per kilowatt hour, according to NStar’s estimates.

“The Cape Wind power will be blended with our existing contracts to help meet our green energy requirements,” NStar spokeswoman Caroline Pretyman said.

The agreement is almost identical to a deal reached two years ago between Cape Wind and National Grid for half of the project’s power.

Because of the larger amount of Cape Wind’s electricity bought by National Grid, the power’s cost is higher for National Grid customers than for NStar customers.

When the deal with National Grid was settled in 2010, the estimated effect on the bill for the average residential customer using 618 kilowatt hours a month was an increase of about $1.50 per month, according to the utility’s calculations.

Since that time, the average use for residential customers in Massachusetts has increased to 667 kilowatt hours per month, according to the U.S. Energy Information Administration.

In addition, a decline in natural gas prices has increased the difference between the cost of Cape Wind’s power and power from generators that use natural gas.

New England gets the largest proportion of its electricity from natural gas.

National Grid officials said Friday that they have not reworked their estimates but agreed that the additional cost of Cape Wind’s power could be more than $1.50 per month. National Grid delivers electricity to Nantucket while NStar delivers power to the Cape and Vineyard.

Opponents of Cape Wind immediately blasted the cost of Cape Wind’s power.

“This is insanity,” said Robert Rio, senior vice president for government affairs at Associated Industries of Massachusetts.

“This is hundreds of millions of dollars they’re putting on people in NStar’s territory.”

Rio said the cost of Cape Wind’s power would average about 26 cents per kilowatt hour over the contract’s 15-year term, far more than the roughly 19 cents quoted in the contract’s first year.

The cost of Cape Wind’s power could rise to roughly 22 cents per kilowatt hour in its first year of operation if Congress does not extend tax credits for offshore wind energy. NStar will also collect an additional 4 percent of the contract’s value from its customers as allowed under the 2008 Green Communities Act.

Based on NStar’s calculations, all of the power from Cape Wind will cost upward of an additional $4 billion over the life of the power contracts, Alliance to Protect Nantucket Sound President and CEO Audra Parker said.

The cost to residential consumers may look small, but businesses will be hit hard, she said.

“We recognize that there is a cost associated with renewable energy,” NStar’s Pretyman said. “We see it as an investment in the state’s clean-energy future.”

NStar’s base distribution cost will otherwise be frozen for the next four years if the DPU approves a pending merger between the utility and Northeast Utilities, Pretyman said.

At the same time that NStar filed its power purchase agreement, Cape Wind released a study by Charles River Associates claiming the project will reduce the cost of power in New England by $7.2 billion over the next 25 years because of its effect on the energy market.

“The report shows that ISO New England, the electric grid operator, first dispatches electric generating units with the lowest cost fuel,” according to a statement from Cape Wind. “Since Cape Wind’s fuel – wind – is zero cost, the report states that Cape Wind will displace higher priced and polluting fossil fueled units resulting in average savings of $286 million per year in New England.”

Source:  By Patrick Cassidy, Cape Cod Times, www.capecodonline.com 31 March 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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