NSTAR and Northeast Utilities have reached separate, comprehensive merger-related agreements with both the Massachusetts Department of Energy Resources (DOER) and the Massachusetts Attorney General. As part of the agreements, NSTAR will enter into a 15-year contract to buy 129 MW of offshore wind power from the Cape Wind project, a 468 MW wind farm planned for Nantucket Sound.
Cape Wind's president, Jim Gordon, says this is a big step for the offshore wind project, which now has contracts in place for approximately 78% of the wind farm's output.
"By including Cape Wind in this utility merger settlement agreement, NSTAR and the [Gov. Deval] Patrick administration are helping ensure that Cape Wind will supply up to 500,000 homes with locally harvested renewable energy and create hundreds of new jobs," he says. "While Massachusetts may be at the end of the energy pipeline for oil, coal and natural gas, we do have an abundant and inexhaustible supply of offshore wind, and we will harness it for a better energy future."
"While future fuel prices are uncertain, the Massachusetts Department of Public Utilities has determined that Cape Wind provides a unique set of benefits for Massachusetts and is cost-effective, and will place downward pressure on wholesale energy prices while avoiding the external costs of burning fossil fuels. We are excited to move forward,’ he adds.
Both settlement agreements call for a one-time $21 million rate credit to be directed to customers of NSTAR Electric, NSTAR Gas and Western Massachusetts Electric Co. (WMECo). Base distribution rates for the utilities would then be frozen until 2016.
Under the agreement with DOER, the utilities pledge further commitments to wind, solar, hydro, energy efficiency and electric-vehicle development. NSTAR will issue a request for proposals to enter into long-term contracts for 10 MW of solar power.
In addition, NSTAR and WMECo will commit to reducing electricity use by 2.5% annually beginning in 2013 through the remaining term of the agreement by increasing energy-efficiency measures. NSTAR also will put in place an electric-vehicle pilot program in Massachusetts, building on work already done by Northeast Utilities.
All existing labor agreements will be honored, and no broad-based employee layoffs will be made, the utilities say.
In filing the settlement agreement, DOER has requested that the DPU hold hearings on the proposal and explain its rate structure and resulting benefits. The merger must be approved by the DPU. The parties have requested an approval date of April 4.