Leaders in the House of Representatives on Monday unveiled their proposal to spur a new offshore wind industry through a system of long-term contracts, but the bill is written to preclude one well-known developer from bidding.
A provision in the much-anticipated energy bill would block Cape Wind Associates from trying to secure one of the contracts for its controversial Nantucket Sound project. Instead, only companies that hold lease rights in specifically designated federal waters south of Massachusetts and Rhode Island would be allowed to participate.
There are still plenty of steps in the legislative process, but that language, if it survives, could be a death knell to Cape Wind. The developer, an affiliate of Boston-based Energy Management Inc., had hoped that a state-mandated bidding process could revive the Nantucket Sound project’s fortunes after it lost contracts with utilities Eversource Energy and National Grid more than a year ago.
“To preclude us just seems unfair,” Cape Wind president Jim Gordon said. “We were surprised and quite frankly a little bit shocked. We’re eager to compete. . . . If this is to be a competitive process, than you shouldn’t exclude a bona fide competitor.”
In addition to offshore wind, the House energy bill would also require utilities to seek electricity from Canadian hydropower sources, a major priority of Governor Charlie Baker’s administration.
Representative Thomas Golden, a Democrat from Lowell who is the House chairman of the Legislature’s energy committee, said the bill represents an effort to accomplish two goals: reducing greenhouse gas emissions and ensuring the state becomes less reliant on natural gas for electricity generation. He said it’s possible other elements beyond the provisions for offshore wind and hydropower could be added by the time the House takes a roll-call vote on the proposal in the coming weeks.
Golden also said House leaders want to focus on “active” offshore wind proposals.
“Everything I continue to hear on Cape Wind is that they have been taken out of what’s happening right now,” Golden said. “There are a lot of questions coming out of the committee [about whether] that can be competitively bid today.”
Gordon disagrees. He pointed out that his project is furthest along in the permitting process, although opponents continue to fight some of those permits in the federal court system. State officials also recently declined to extend a permit for Cape Wind’s underwater power line connection, but Gordon said he’s appealing that decision.
The energy bill’s language is being viewed by many as just a starting point for negotiations. The Senate will inevitably want changes, which means the bill’s fate will be decided by negotiators who have yet to be appointed from both chambers. Time is running out, though: Legislators adjourn from formal sessions at the end of July.
Senator Ben Downing, a Pittsfield Democrat who is the Senate chairman of the joint energy committee, said he was disappointed that he only saw the bill’s language for the first time on Monday and isn’t prepared to endorse it. He would like to see a broader bill, possibly tackling other issues such as energy efficiency and storage.
“Given the nature of this proposal, we’re setting ourselves up for a difficult conference committee, which is unfortunate,” Downing said.
Then there are the details about how the House would accomplish its goals. The House bill would require electric utilities – namely National Grid and Eversource – to solicit bids from companies that want to sell the equivalent of up to 1,200 megawatts of hydropower capacity and a similar amount of offshore wind.
The utilities for the hydropower purchase would have the option of entering into contracts for other clean-energy sources, such as wind or solar farms, that could piggyback on a transmission line connecting the Canadian dams to southern New England.
The Baker administration had been pushing for a commitment to solicit clean energy from the north, but his bill, released last year, sought twice that amount. Despite that fact, Baker on Monday praised the House bill, calling it a strong effort to diversify the region’s energy portfolio.
For offshore wind power, the amount of energy that could be procured is more than twice as much energy as what has been proposed for the 130-turbine Cape Wind project.
Three other wind farm developers – Deepwater Wind, Dong Energy, and OffshoreMW – are looking to build more powerful wind farms, further offshore, one south of Rhode Island and two south of Martha’s Vineyard. House lawmakers are hoping the bill will cater to those projects, with the goal of kick-starting a new industry in the state.
Offshore Wind Massachusetts, a local trade group funded by those three developers, promptly issued a statement praising the House bill.
But the Environmental League of Massachusetts issued its own statement saying that the 1,200-megawatt threshold is too low and that the state should be more aggressive in fostering the offshore wind industry to make the development of these turbines more cost-effective.
The utilities would be able to pass the costs of these projects on to ratepayers. State officials hope that the long-term contracts can improve the electric grid’s reliability and help the state meet its aggressive greenhouse gas reduction goals.
But the New England Power Generators Association said the biggest impact would be to drive up customers’ bills to help pay for these power sources. The trade group is worried about the bill creating an unfair playing field for its members, which include operators of fossil fuel-burning power plants.
PowerOptions chief executive Cynthia Arcate, whose Boston-based consortium specializes in buying energy in bulk on behalf of nonprofits, also criticized the bill. “Ratepayer-subsidized energy purchases of this magnitude are simply anticompetitive and place too much risk on consumers,” Arcate said in an e-mail.
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