Several groups to argue before Massachusetts Supreme Judicial Court that National Grid's deal to buy 50% of power from proposed Cape Wind project sets risky precedent by allowing utilities to bypass competitive bidding process, pass costs to customers
September 8, 2011
– Parties will argue that the high-priced no-bid contract sets a harmful precedent for MA ratepayers
The Alliance to Protect Nantucket Sound, along with the Associated Industries of MA, New England Power Generators Association, and TransCanada Power Marketing, will appear tomorrow before the Massachusetts Supreme Judicial Court to make oral arguments regarding the Department of Public Utilities (DPU) decision to approve the over-priced, no-bid power purchase agreement between Cape Wind and National Grid for 50 percent of Cape Wind’s power. The contract sets a risky precedent by allowing utilities to negotiate expensive power agreements outside of the competitive bidding process and to allocate the costs of those contracts unfairly to residential and commercial customers.
“A decision by the court to allow the Cape Wind-National Grid contract to stand would sentence ratepayers to increased electric bills, a future of skyrocketing renewable energy costs, and give the green light for future renewable energy decisions to be based on political considerations rather than price,” said Audra Parker, president and CEO of The Alliance to Protect Nantucket Sound. "If the overarching goal is to reduce carbon dioxide emissions, Cape Wind is the wrong choice. Ratepayers could get more than twice the emission reductions and more than twice the power for the same amount of money from a variety of far lower priced renewable resources."
The Alliance to Protect Nantucket Sound will argue that renewable energy projects need to compete effectively with other renewable resources on the basis of price. Promoting the most economical projects is the best way to ensure the development of renewable energy in the Commonwealth and take effective steps to address global climate change.
“The Cape Wind power purchase agreement is exactly the kind of contract that we need to avoid if we are serious about combating global climate change without unduly burdening Massachusetts households and businesses,” said Parker. “Cape Wind and National Grid deliberately entered into the contract without the benefit of competitive bids and now ratepayers are saddled with a contract that is well more than double that of other renewable energy resources.”
Cape Wind’s contract with National Grid has a starting price of 19 cents per kilowatt hour with an annual rate increase of 3.5 percent, resulting in a price of over 30 cents per kilowatt hour in the contact’s final year. By contrast, NSTAR has signed three contracts with developers of land based wind projects that are fixed at a price of less than 10 cents per kilowatt hour.
The Alliance to Protect Nantucket Sound will also argue that the power purchase agreement amounts to an unconstitutional restriction on interstate commerce because lower-priced out-of-state renewable energy projects were excluded from consideration.