Nearly 50 elected and business officials from southeastern Massachusetts are urging the Baker administration to tweak the contracting process for the next offshore wind procurement to give a greater emphasis to onshore development investments.
Gov. Charlie Baker has repeatedly marveled at the low bid Vineyard Wind made to secure the first wind farm contract in Massachusetts, but the South Coast officials say that low price came with minimal onshore investment.
In a February 26 letter to Baker’s energy secretary, the officials say Massachusetts got a levelized price of 6.5 cents per kilowatt hour over the life of the 20-year contract and a $12 million commitment for infrastructure and training. Vineyard Wind landed an 800 megawatt contract.
By contrast, Rhode Island secured a contract with Ørsted for a 400 megawatt wind farm at the higher levelized price of 7.4 cents per kilowatt hour, but that higher price came with $40 million in port infrastructure commitments. In Connecticut, the letter says, Ørsted agreed to spend $32 million in and around New London, including $1.5 million in annual host community agreements.
“Although we are excited that the offshore wind energy industry will help to lower the state’s carbon emissions and although we are pleased that competition in the first offshore wind energy procurement resulted in electricity rates that were significantly lower than anticipated, for us the effort has been primarily about economic opportunity and development,” the letter said.
The South Coast officials say the contracting process helped foster the outcome by using price to establish 75 percent of an applicant’s bidding score and splitting the remaining 25 percent among five qualitative factors, one of which was economic benefits.
“In retrospect, no one should be surprised that this framework yielded an award to the applicant with the most competitive electricity price, and the most modest investment commitments,” the letter said. “In our view, this result was inconsistent with the intent of the Energy Diversity Act of 2016.”
The letter was signed by the mayors of New Bedford and Taunton; lawmakers from across southeastern Massachusetts, including Rep. Patricia Haddad of Somerset; the top officials at UMass Dartmouth and Bristol Community College; and business leaders from across the region.
Mitchell said the contracting problem can be remedied by designating that 15 percent of the applicant’s score be based on economic benefits. The emphasis on price – at 75 percent – would remain the same. The other four qualitative factors would split the remaining 10 percent.
Mitchell calls the proposal a “mini-tweak” to resolve what he called a “mashed potatoes problem” with the previous contract design.
The letter also stressed Baker administration officials should encourage onshore investments that would help build an industry in southeastern Massachusetts.
Haddad has filed legislation separately that would delete a provision in the original procurement legislation that requires each successive wind farm to offer a lower price than its predecessor. She said a lower price is a worthy goal, but it’s not the only goal of the procurement process.
“It’s not just an energy bill – it’s more than that,” she said. “It’s about jobs and starting a new industry.”
A spokeswoman for Matthew Beaton, Baker’s secretary of energy and environmental affairs, declined to comment. An administration official said the Baker administration would respond to the letter.
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