NSTAR Finds Inexpensive Wind Power, Bypassing Cape Wind

Posted by Robert Rio on Feb 24, 2011 9:44:00 AM

A proposal by NSTAR to purchase power from three wind energy companies confirms that Massachusetts utilities can provide plentiful amounts of renewable electricity without saddling ratepayers with expensive projects like Cape Wind.

Energy costsNSTAR sought state approval Friday to buy 109 megawatts of electricity from Hoosac Wind of Massachusetts,  Groton Wind of New Hampshire and Blue Sky East of Maine. The competitively bid contracts range between 10 and 15 years and together represent 1.6 percent of the total demand from NStar’s 1.1 million customers in 81 eastern Massachusetts communities.

A price was not disclosed, but independent estimates put the cost at less than 10 cents per kilowatt hour.

NSTAR did not purchase electricity from the proposed 130-turbine Cape Wind project, which last year signed a contract to sell power to the utility National Grid at an average price of 24 cents per kilowatt hour over 15 years. AIM has aggressively opposed the Cape Wind deal with National Grid because it would add thousands of dollars to the monthly electric bills of Massachusetts employers when less expensive alternatives exist for renewable power.

AIM is currently appealing the commonwealth’s approval of the Cape Wind/National Grid agreement to the Supreme Judicial Court.

Submission of the three proposed power agreements by NSTAR was made under The Green Communities Act of 2008, which requires all utilities in Massachusetts to seek and sign long-term contracts  of 10 to 15 years for electricity from “renewables” for up to 3 percent of total demand. NSTAR used an arm’s length competitive bidding process with strict criteria to evaluate bids received and was not biased to any specific renewable technology or siting location.

The company received 23 times more in bids for supply than was needed, reflecting ample competition to develop and build cost effective renewable generation.

“AIM applauds NSTAR for its approach in soliciting the bids for renewable energy, for its attention to the needs of and impact of such contracts on ratepayers, and for the excellent price and terms it got for the renewable supply,” said Robert Ruddock, Special Counsel for AIM.

“The price is firm and fixed for the length of each of the three contracts with no annual cost increases. That means no surprises for businesses and residents when the open their electric bills.”

Ruddock said the NSTAR filings show that the contracts are cost effective against expected costs for renewable power now and in the future – some $111 million less than projected future renewable costs.

By contrast, the National Grid/Cape Wind contract is $1.2 billion above the projected costs of renewable power in the future, has an annual escalator for the 15 years of the contract, was not the result of a transparent open competitive bidding process, and is focused on one specific technology and location. 

AIM has argued for months that customers of National Grid face needless increases in their monthly bills because the utility has decided to pay a premium price for electricity from Cape Wind instead of buying much cheaper renewable power available from other sources.

The numbers confirm that AIM has been right on the money to identify Cape Wind as an overpriced  project that represents one the largest potential transfers of wealth from productive sectors of the economy to a single private developer. The recent competitive electricity bids provide the good news that Massachusetts can move toward a future of wind and renewable power without bankrupting the rest of the economy and the jobs that go with it.

Why is all this so important?

The Beacon Hill Institute, the research arm of the Department of Economics at Suffolk University in Boston, recently confirmed AIM’s ongoing concerns about the cumulative cost of mandated green-energy programs in Massachusetts. The report, entitled The High Cost of Green Energy Programs in Massachusetts, estimates  that the commonwealth’s “green” policies will increase the electric bills of Massachusetts ratepayers by $9.8 billion, or 2.6 cents per kilowatt hour, over the next decade.

Topics: Associated Industries of Massachusetts, AIM, Energy, Cape Wind

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