Nstar agreed to buy pricey electricity from the controversial Cape Wind project to remove the “fear” that Massachusetts regulators might otherwise block the company’s planned merger with Northeast Utilities, a top exec says.
“We tried to take that uncertainty off the table by having an outcome that we knew we could live with,” new Northeast Utilities chief Tom May told reporters yesterday after the utilities completed their $5 billion merger.
Boston’s NStar [NST] and Connecticut-based Northeast agreed in 2010 to merge, but spent 18 months getting regulatory approval from the two states and Uncle Sam.
The Massachusetts Department of Public Utilities gave the deal its final needed sign-off last week.
Critics claim the state held out until Nstar agreed to buy power from Cape Wind, a planned offshore wind-turbine complex slated for construction in Nantucket Sound.
Nstar had long balked at buying Cape Wind’s power over the price – but relented in February in exchange for the state Department of Energy Resources’ endorsement of the merger. The agency’s support helped clear the way for the DPU to OK the deal.
May, who headed Nstar prior to the merger, conceded that Cape Wind charges more than traditional power producers do. But he said Northeast Utilities needs to meet various states’ green-energy requirements— and wanted to avoid “the fear of the unknown” by seeking DPU approval without a Cape Wind deal.
Cape Wind spokesman Mark Rodgers told the Herald his firm believes the project’s “benefits (will) exceed its costs.”
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