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Eversource offered to drop out of offshore wind procurement team

Eversource Energy in February offered to withdraw from the team evaluating the bids of companies seeking to supply electricity from wind farms off the coast of Massachusetts because the utility was also involved in bidding on the contracts.

According to the report of an independent evaluator hired to monitor the fairness of the contracting process, Eversource made the surprise offer on February 21, nearly two months after the bids were submitted and toward the beginning of the review process.

“Eversource stated that the purpose of its withdrawal was to address concerns regarding public confidence in the evaluation and selection process … where an Eversource affiliate (Bay State Wind) was a bidder,” the report said.

Eversource ultimately decided not to pull out of the evaluation team after the independent evaluator and the Baker administration raised concerns about the legality of a withdrawal (the state law authorizing the procurement required utility participation) and the potential loss of expertise to the evaluation team.

It was unclear what prompted Eversource to offer to withdraw in February, given that concerns had been raised about the utility sitting on both sides of the bargaining table back in 2017, before the procurement process had even begun. The independent evaluator’s report offered no insights on the change of heart and an Eversource spokeswoman said “we have nothing further to add.”

Three companies were bidding on the state-mandated power contract, and two of them had ties to utilities on the evaluation team. Bay State Wind was a partnership of Eversource and Orsted, and Deepwater Wind had a transmission relationship with National Grid. The third bidder, Vineyard Wind, which had no ties to the evaluation team, won the contract in May, although financial details of its bid were not released until August 1.

Overall, the independent evaluator’s report said the selection process was fair and above-board. It said all three utilities agreed Vineyard Wind had the best proposal, but they differed on how big the initial project should be.

National Grid and Unitil favored an 800-megawatt proposal put forward by Vineyard Wind because the entire project could take advantage of the 18 percent federal investment tax credit, which is expected to expire soon. With state law requiring future offshore wind procurements to come in at prices below the cost of earlier ones, the two utilities also said the 800-megawatt proposal offered the best option for future savings.

Eversource backed Vineyard Wind’s 400-megawatt proposal, arguing the smaller project had the least risk while the larger project would limit competition for future procurements and discourage a wide variety of onshore suppliers from entering the market. Ironically, Bay State Wind made the opposite argument in public statements prior to the beginning of the selection process. The company at that time said an 800-megawatt proposal would offer the best pricing.

Because the utilities were unable to reach a unanimous agreement on which size proposal to select, the Baker administration made the final decision, selecting Vineyard Wind’s 800-megawatt proposal.