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AG wants to review deal with Cape Wind

$3b National Grid contract to be vetted for cost-effectiveness

By Erin Ailworth
Globe Staff / May 20, 2010

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State Attorney General Martha Coakley is requesting up to $150,000 to retain “experts and consultants’’ to help review an agreement by the utility company National Grid to buy half of the power generated by the proposed Cape Wind energy project.

Coakley, the state’s ratepayer advocate, could sway the Massachusetts Department of Public Utilities, which must decide whether National Grid’s contract with Cape Wind is a good deal. That question is hotly debated, even among supporters of renewable energy.

National Grid announced the $3 billion contract with Cape Wind earlier this month. Under the 15-year agreement, in 2013, the utility would buy half of the power generated by the 130-turbine wind farm at a starting price of 20.7 cents per kilowatt hour, a price well above the current rate for conventional power, with that cost increasing by 3.5 percent annually. The utility also signed a nearly identical contract for rights to the second half of Cape Wind’s power, and has agreed to sign those over to anyone wanting to buy Cape Wind power at National Grid’s price.

The question for many, said consumer advocate and lawyer Jerrold Oppenheim, is how much is too much for renewable energy?

“Is it really worth it to have clean pow er or not?’’ he asked. “I think the state has made its choice on that, but I think there’s a question as each case goes by whether this is the most cost-effective thing to do.’’

Bill Short, an independent consultant on renewable energy, contends that National Grid’s contract with Cape Wind is too expensive. Short testified against a similar contract between National Grid and a smaller offshore wind farm in Rhode Island, which was ultimately rejected by that state’s utility commission.

“Can the consumer get the relevant product from Cape Wind for less from elsewhere?’’ Short asked yesterday. “If it can, that’s where we draw the line.’’

Coakley’s $150,000 request represents the maximum permitted under state law. If approved, National Grid would be required to cover the cost.

“The Cape Wind project represents a step forward in the Commonwealth’s efforts to develop clean, renewable energy. We expect this to be a robust and transparent review process into National Grid’s plan to purchase power from the wind farm for the next 15 years,’’ Coakley wrote in a statement to the Globe. “As the Commonwealth’s ratepayer advocate, our office will work to ensure that the contract proposal is in the customers’ long-term economic interests and does not add unnecessarily to the region’s already high cost of electricity.’’

Jill Butterworth, a spokeswoman for Coakley, said the attorney general has hired outside specialists several times since being given the authority to do so in the Green Communities Act of 2008. Coakley decided to exercise the option in this case, Butterworth added, because the National Grid contract with Cape Wind is “complex’’ and would benefit from the insight of people with knowledge of “long-term contracts, renewable projects and energy markets.’’

But Coakley cannot build her case for or against the contract until National Grid files testimony about the Cape Wind deal. The public utilities department has asked for those documents by tomorrow, but National Grid requested a two-week extension.

“Given the importance and high profile of this case, it would be beneficial for the Department and in the public interest for National Grid to have ample time to prepare,’’ the utility wrote in a filing made with the Department of Public Utilities earlier this week.

Erin Ailworth can be reached at eailworth@globe.com.