OFFSHORE WIND CUTS PRICE

AG wrests price cut from Cape Wind; But critics still angry despite 10% reduction
Beth Daley, July 31, 2010 (Boston Globe)

"The developers of the Cape Wind energy project in Nantucket Sound have agreed to reduce the price of its electricity by 10 percent, saving consumers at least $456 million over the 15-year span of a proposed contract with National Grid.

"The deal, negotiated by Attorney General Martha Coakley’s office, comes amid deepening controversy over the cost of the 130-turbine project planned for the waters off Cape Cod. National Grid signed an agreement in May to purchase 50 percent of Cape Wind’s power at prices more than double the current cost of electricity from fossil fuels — and higher even than other renewable power."

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"The agreement and attorney general’s endorsement is expected to make it easier for the contract to gain approval from the state Department of Public Utilities…The agency’s signoff is critical for the project to get financing…But the deal did not satisfy critics…Both Coakley and some opponents demanded that Cape Wind reveal projected construction costs and how much profit the developers anticipate making. The attorney general’s office did not win [such concessions]…

"Instead of the 20.7 cents per kilowatt hour National Grid and Cape Wind negotiated as a starting price, customers would pay 18.7 cents per kilowatt hour…probably saving homeowners several dollars a year — and businesses much more. The cost per kilowatt is to increase 3.5 percent per year…To ensure that National Grid’s customers will not have to pay for even more Cape Wind power, the agreement also prohibits the utility from buying the other 50 percent of the wind farm’s output…If Cape Wind receives up to $55 million in federal loan guarantees or saves money through a reduction in construction costs, the contract price will be adjusted downward…"

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"National Grid officials said they had driven a hard bargain with Cape Wind [developer Jim Gordon] in the spring, but Coakley’s office was able to provide additional leverage for ratepayers, helped in part by changing market conditions such as falling interest rates since the original contract was struck…Patrick administration officials…said the earlier negotiated price…would save money over time by locking in a price and removing a portion of electricity use from volatile fossil fuel markets, in addition to helping fight global warming…[T]he negotiated price in the original contract would mean a rise of slightly more than $2 in the average residential customer’s monthly bills…Business opponents, including the retail giant Wal-Mart, worried it would translate into steep price increases for stores and warehouses.

"… Ian Bowles, state secretary of Energy and Environmental Affairs, praised the attorney general’s office for negotiating a lower price…But Associated Industries of Massachusetts, the major lobbying group for businesses in the state, said it was disappointed…The Alliance to Protect Nantucket Sound, complained that Cape Wind developers have not been required to disclose how much profit they expect to make…[and is] concerned about the aesthetics of the wind farm…[as well as its] cost, environmental, and other issues."