Cape Wind Underscores Electricity Cost Issues Facing Employers
The controversial Cape Wind offshore generation project underscores a delicate balance faced by Massachusetts employers: How do you support environmentally friendly power generation when it carries a price premium and you already pay the highest electric rates in the country?
AIM has been quoted extensively in the national media during the past month on the feasibility of Cape Wind and other renewable energy projects. We believe it is important to state our position clearly.
The utility National Grid is currently negotiating with Cape Wind for a long-term power contract that could run as long as 15 years. With contracted prices expected to be in the 15-17 cent per kWh range, Cape Wind power will be almost double the going rate for power generated by highly efficient and clean natural gas fired power plants.
Massachusetts prohibited utilities from entering into long-term power contracts from 1997 through last year, when legislation again allowed such agreements for renewable power. The potential length of the National Grid/Cape Wind contract and the sheer size of Cape Wind add up to extensive price exposure for residential and business ratepayers.
AIM opposes long-term contracts for any type of power. The agreements lock utilities into prices that may not be to the long-term benefit of the ratepayer, who carries all the risk - if power prices later fall, the utility is obligated to pay the higher prices until the contract ends. The risk is particularly problematic for large and expensive renewable projects like Cape Wind.
The cost of power is nothing short of a survival issue for Massachusetts employers, who in some cases pay twice what competitors in other states pay to turn on the lights. AIM has worked for years to moderate the cost of electricity because skyrocketing rates reduce the competitiveness of Massachusetts employers and impede their ability to create jobs for the people of the commonwealth.
AIM believes that the most efficient (and hence the cheapest) renewable power should be purchased first to minimize costs to ratepayer. We should not be paying a premium for symbolic gestures. Buying the cheapest available renewable power - onshore or offshore; wind, solar or biomass - will produce the greatest environmental benefits at the cheapest cost to ratepayers.