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Business leaders blast Cape Wind

It’s been a while since Cape Wind has made full-page newspaper headlines – but Thursday, it did. Only these were full-page ads in the Boston Globe, Boston Herald, and Cape Cod Times from two of the state’s most powerful business groups denouncing the project.

Their message: the premium-priced power Massachusetts utility customers will have to buy from Cape Wind will make the state even “less competitive” for business, many of the jobs it creates may be outsourced to other states or countries, and on balance, the $2 billion 130-turbine project “does not make sense.” Associated Industries of Massachusetts, the state’s largest business lobby, and the Massachusetts Competitive Partnership, a group whose directors include 16 of the biggest-name CEOs in the state, bought the ad together.

Cape Wind fired back that the ad’s claims are “their same tired and misleading criticisms of this important project that have been rejected time and again” and insisted after 12 years, they are on track to get financing and start construction imminently.

What triggered the timing of the ads: Cape Wind is asking the U.S. Energy Department for taxpayer-backed loan guarantees for the project as it works to line up bank or investor financing, which comes on top of a host of state efforts to support the project including Department of Public Utilities approval of contracts under which National Grid and Northeast Utilities, parent of NStar, are agreeing to pay a premium over current electric prices for 77.5 percent of Cape Wind’s power output (business critics say it would cost ratepayers $150 million to $200 million annually, but Cape Wind says it would run to 1-2 percent of total average business and customer bills and would be offset by a host of power-grid, environmental, job-creation and other benefits). Massachusetts has begun constructing a $100 million marine terminal in New Bedford to support offshore wind farm construction, including Cape Wind, and the project’s turbines would occupy a 24-square-mile area of Nantucket Sound that many project critics say voters or local legislators never got a chance to decide should be open to wind turbines in the first place.

“We keep saying, ‘Enough is enough,’ ” AIM general counsel Robert Rio said in an interview Thursday afternoon. “This project has gotten every conceivable amount of money they could out of the state of Massachusetts. It’s time for them to them to get financing on their own.”

In an April 24 letter to the Energy Department, Rio noted that Cape Wind vice president Dennis Duffy said the 77.5 percent power-purchase deal with National Grid and NStar “would be sufficient to finance the project.”

“Cape Wind promised, and said under oath during the hearings, that the amount of power they had already contracted for” the utilities to buy “was enough to get financing, and here they are, going to the federal government and asking for $300 million more of taxpayer dollars, and we simply think that’s wrong,” Rio said. “I think the fact that they have gone for this DOE loan guarantee shows that their investors are not sure that this project is a good deal.”

Cape Wind spokesman Mark Rodgers said: “Cape Wind has been reviewed carefully for 12 years, during which time it has earned the approval of 17 Federal and State agencies that have confirmed Cape Wind would create important economic and environmental benefits. Cape Wind has also earned the support of the vast majority of Massachusetts residents and their elected representatives, as well as strong support from labor, trade, environmental and health organizations. After this careful vetting, most experts agree that Cape Wind will create significant benefits for Massachusetts and the surrounding region such as reducing air pollution and creating hundreds of clean energy jobs. It is odd after all of this verification of Cape Wind’s benefits that these two business groups would now choose to run paid ads to yet again make their same tired and misleading criticisms of this important project that have been rejected time and again.”

“They lost in the regulatory arena, and now they’re trying to buy newspaper space” to rehash the same arguments opponents have made and judges up to the Massachusetts Supreme Judicial Court have rejected, Rodgers said. “Bob Rio tried very hard, but he lost his battle, and AIM lost their battle, and we got approved on these contracts” after the Massachusetts SJC agreed with the DPU the project would create, net, positive benefits for the state.

Rodgers said the loan guarantee the project is seeking from the Energy Department isn’t a taxpayer handout, but a commercial loan under a program approved during the George W. Bush for innovative, job-creating projects. As the project negotiates with banks and “equity partners, we’re only looking at the DOE for a relatively modest portion of the project financing … We’re hoping to wrap that up by the end of this year, and everything else will follow from that.”

AIM has argued if Cape Wind has sold 77.5 percent of its power output, it should simply agree to build 77.5 percent as big a project – say, 100 turbines instead of 130. But Rodgers said that does not make operational or financial sense. “They think the cost is too high – well, the smaller you get, the higher the cost, the larger you are, you get a better economy of scale,” Rodgers said.

One interesting wrinkle in the whole story: Thomas J. May, CEO of Northeast Utilities (and before that CEO of NStar), is one of the 16 directors of the Massachusetts Competitive Partnership, which backed the newspaper ads. NU and NStar agreed – under intense state pressure – to buy 27.5 percent of Cape Wind’s output, a decision that preceded the DPU finally agreeing to let the companies merge.

So, is May, or is NU, now rethinking its support for Cape Wind? Partnership CEO Daniel O’Connell said May has deliberately not served on the partnership’s committee that takes stands on energy issues (it is chaired by EMC’s Joe Tucci) and May “abstained” from the group’s decision to run the ads slamming Cape Wind. (The group’s directors also the CEOs of Bank of America, BJ’s Wholesale Club, Fidelity Investments, The Kraft Group, Liberty Mutual, MassMutual Financial, Partners Healthcare, Putnam Investments, Raytheon, Staples, and State Street.)

May spokeswoman Caroline Pretyman said in an email: “Not all members of trade groups necessarily agree on every issue, as is the case here with Tom May and the Mass. Competitive Partnership’s position on Cape Wind. At NSTAR, we know that we will need all available resources to help meet the state’s climate change goals. The power from Cape Wind will be blended with our existing contracts to help meet our green energy requirements.”

With videographer Scott Wholley

[video available]