Massachusetts' second-largest utility NStar bypasses proposed Cape Wind project, opts instead to buy wind power from three wind farms in Massachusetts, Maine and New Hampshire to meet renewable power mandates

Rachel Carter

BOSTON , March 1, 2011 (Associated Press) – The second-largest utility in Massachusetts has agreed to buy electricity from three wind power companies to help it meet renewable power mandates, but it won't be buying from a high-profile wind farm off the coast of Cape Cod.

On Friday, NStar filed contracts with the Department of Public Utilities to buy power from Hoosac Wind in Massachusetts, Groton Wind in New Hampshire and Blue Sky East in Maine.

Cape Wind, the nation's first offshore wind farm, is still trying to find a buyer for half its power. It agreed last year to a 15-year deal to sell the first half to National Grid starting at 18.7 cents per kilowatt hour, and increasing 3.5 percent annually.

If Cape Wind doesn't sell the rest of its power within the next several months, it may be forced to move ahead with a project smaller than the 130-turbine, 468-megawatt wind farm planned in Nantucket Sound.

NStar is the only other Massachusetts utility big enough to buy a large portion of Cape Wind's power. Its three deals, if approved by state regulators, would eliminate any chance that it would buy all of the power Cape Wind still has on the market, though it could conceivably buy a portion of it.

Gov. Deval Patrick's administration has backed Cape Wind vigorously, but NStar said months ago it had decided to pursue cheaper renewable energy sources.

The three contracts NStar signed, ranging from 10 to 15 years, equal about 109 megawatts of power. The prices NStar has agreed to pay for the power weren't disclosed, and NStar said such pricing is confidential.

"The contracts represent a good value for onshore wind resources for our customers," said NStar spokeswoman Caroline Allen.

Cape Wind spokesman Mark Rodgers said the deals satisfy just a small part of the region's growing demand for renewable power, which exceeds what could be supplied by Cape Wind and all planned land wind and solar projects combined.

"Today's announcement represents only a modest portion of the total quantity of clean power that will need to be purchased," he said.

"We remain confident that the unique features of Cape Wind, such as strong production during times of peak electric demand and its close proximity to a region that needs its electricity, will continue to make it attractive to other potential buyers," Rodgers said.

NStar signed all three contracts Dec. 23 and filed them within a required 60-day window Friday. NStar is asking state regulators to approve the contracts within 180 days.

Though the prices on the recent deals weren't disclosed, a 10-year deal NStar has with TransCanada to buy power from a Maine wind farm is a flat 10.5 cents per kilowatt hour.

The three new contracts represent about 1.6 percent of NStar's demand, and the utility is required to secure 3 percent of its electricity demand through long-term contracts with renewable power producers by mid-2014. The company will be trying to secure more deals to meet that requirement in the coming years, Allen said.

According to court filings, the roughly 29-megawatt Hoosac project, in Monroe, Mass., and Florida, Mass., is set to be running by July 2012, the 32-megawatt Blue Sky East wind farm in Eastbrook, Maine, is scheduled to be operating by May 2012, and the 48-megawatt Groton project in Groton, N.H., is scheduled to be operating by December 2012.

The Blue Sky deal is for 15 years, while other two are both for 10. All are fixed-priced deals, meaning the price per kilowatt hour won't increase over time. The Hoosac and Groton projects are owned by the Spanish power utility Iberdrola SA. Blue Sky is owned by Boston-based First Wind.

In a separate transaction, NStar is also seeking approval for a merger with Northeast Utilities, which would create the largest utility in New England with 3.5 million electric and gas customers in three states.

Recent comments and court filings indicate NStar's decision about Cape Wind could be a factor when the merger goes before Massachusetts regulators.

For instance, just before he left office in December, the state's former energy chief, Ian Bowles, argued that large utility mergers needed a "new standard of review" that guarantees certain public benefits, including advancing "the development of the commonwealth's solar and offshore wind resources."

Cape Wind, which hopes to begin generating power by 2013, is by far the state's largest offshore wind and renewable power project and been repeatedly touted by officials as a cornerstone of its emerging renewable energy industry.

A spokeswoman for the state Department of Energy and Environmental Affairs declined to comment, citing the ongoing state review of the NStar merger with Northeast Utilites.

NStar's Allen also cited the merger review and said it would be inappropriate to comment on whether its recent contracts could affect it.

She did say the merger would be good for the state's renewable energy goals.

"A combined company will be better able to advocate on a national level and a state level for green policies," Allen said.

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