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Cape Wind courts NStar for utility contract

Deal key to getting construction funds

By D.C. Denison
Globe Staff / May 25, 2010

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Representatives from NStar met with developers of the Cape Wind energy project yesterday, but neither party would say whether the utility is closer to becoming a customer of the proposed wind farm.

An NStar spokeswoman, Caroline Allen, confirmed that the meeting took place in Cape Wind’s Boston office, but would not provide any more details.

Mark Rodgers, Cape Wind’s communications director, said the company “does not discuss business negotiations in progress.’’

The proposed 130-turbine offshore wind farm recently received federal approval for construction in Nantucket Sound.

Yesterday’s meeting was significant, because utility commitments to buy Cape Wind power are seen as critically important for the project to obtain construction financing.

Cape Wind landed its first such commitment earlier this month, when National Grid, another major utility company, signed a 15-year contract to buy half the power Cape Wind is expected to produce. The utility agreed to pay 20.7 cents per kilowatt hour — significantly higher than current rates for conventional power — when Cape Wind launches in 2013, and to increase the rate by 3.5 percent a year. National Grid also signed a contract for the second half of Cape Wind’s power, but said it will assign rights to that portion of the power to other buyers of the wind-generated electricity.

The current NStar basic service rate for electricity is 8.88 cents per kilowatt hour. That price is expected to drop in July, because of a decline in the price of oil and the discovery of new natural gas supplies.

NStar’s chief executive, Thomas May, has said that supports alternative energy, but is not counting on Cape Wind to meet state requirements that utilities buy a percentage of their power from renewable energy producers. May also has questioned the cost of renewable power, noting in an interview with the Globe earlier this year that “clean energy isn’t cheaper energy.’’

Opponents of Cape Wind say the National Grid contract is evidence that the wind farm’s energy will be too expensive for Bay State residents, who already pay some of the country’s highest utility rates.

Audra Parker, president of the Alliance to Protect Nantucket Sound, which has long fought the wind farm, said, “We now know that Cape Wind energy will not be cost-effective for National Grid customers. It won’t make economic sense for NStar customers either.’’

But Andrew Tarsy, executive director of the advocacy group Progressive Business Leaders Network, which has supported Cape Wind, said that “to talk about price per kilowatt hour in a vacuum is to miss the point.’’

Tarsy characterized Cape Wind as “a symbol of the energy future,’’ adding that if wind energy costs more “on Day One,’’ that’s not important.

“This is about fundamental change in the sustainability and competitiveness of our regional economy,’’ Tarsy said.

D.C. Denison can be reached at denison@globe.com.