Opponents of the proposed Nantucket Sound wind farm have filed the latest in a long line of lawsuits seeking to block the project.
The town of Barnstable, several businesses and individuals, and the project’s primary opposition group, the Alliance to Protect Nantucket Sound, filed the lawsuit Tuesday in U.S. District Court in Boston challenging a contract between NStar and Cape Wind.
“These are all ratepayers that would be forced to pay much higher rates as a result of Cape Wind,” alliance president Audra Parker said about the plaintiffs. “They would basically be harmed by an increase in electricity bills.”
The lawsuit challenges a power purchase agreement between Cape Wind and NStar as illegal on two fronts.
In forcing NStar to sign the deal with Cape Wind as a condition of the state agreeing to a merger between the company and Northeast Utilities, the state discriminated against out-of-state power companies, according to the lawsuit.
In addition, state regulators exceeded their authority in setting wholesale rates for the contract in violation of the Federal Power Act and Supremacy Clause of the U.S. Constitution, which reserves that power for the Federal Energy Regulatory Commission, according to the complaint.
NStar and Cape Wind signed the pact for 27 percent of the wind farm’s power in March 2012 based on terms agreed to as part of another deal between the wind energy developer and National Grid for 50 percent of the project’s power.
Both companies agreed to pay 18.7 cents per kilowatt hour for the wind farm’s power in the first year with the price increasing 3.5 percent annually and increasing even further if the project fails to qualify for federal tax credits.
Opponents, including the alliance, have argued that the additional cost of power from Cape Wind compared with market rates would equal billions of dollars over the life of the 15-year contract.
Cape Wind and its proponents argue that the cost to the average residential ratepayer once the power is mixed in with other sources will be only a few dollars a month and that there are other benefits to the project.
The state Department of Public Utilities approved both contracts and is named, along with the state Department of Energy Resources, Cape Wind and NStar as defendants in the lawsuit.
State officials are reviewing the complaint, according to DPU spokeswoman Krista Selmi.
“It’s unfortunate that we are named,” NStar spokesman Michael Durand wrote in an email. “This case is similar to others that challenge the issue of state (versus) federal regulation of power markets.”
NStar will abide by the ultimate outcome from the courts, Durand wrote.
The new lawsuit is different from previous lawsuits challenging the project because it raises a new claim that the project violates a provision implied in the Commerce Clause of the Constitution that prohibits discrimination against out-of-state companies, Parker said.
Cape Wind spokesman Mark Rodgers wrote in an emailed statement that the complaint was frivolous and without merit.
“The opposition group was unsuccessful in challenging a nearly identical power contract between Cape Wind and National Grid and they will fail again here,” Rodgers wrote. “After careful review, the Department of Public Utilities found that Cape Wind was ‘cost effective’ by providing unique benefits that exceeded the cost of its power.”
In 2011 the Massachusetts Supreme Judicial Court ruled in favor of the DPU’s approval of the contract between Cape Wind and National Grid and against claims by opponents that the agreement was unconstitutional.
The contract with NStar, however, is different because the state forced NStar to sign the deal as a prerequisite for its $19.7 billion merger with Northeast Utilities, Parker said.
“The state dictated a certain pricing scheme based on the other contract,” she said. “In this case the state exceeded its authority.”
There have been recent cases in New Jersey and Maryland that call into question the state’s ability to set wholesale rates, including through renewable portfolio standards, Parker said.
Cape Wind still faces a handful of other legal challenges that have been consolidated into two federal lawsuits, challenging the approvals of the project by the Federal Aviation Administration and the Department of Interior. Decisions in those cases are expected soon, according to Cape Wind officials.
The company also must still secure financing. At the end of last year officials with Siemens, the company providing the project’s turbines, and Cape Wind said they believed the project had qualified for an important federal tax credit based on money that already had been spent before the credit expired at the end of the year.
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