Massachusetts Attorney General Martha Coakley has announced an agreement in principle with Cape Wind that will reduce the costs for ratepayers of the proposed contract.
The agreement in principle was reached by the attorney general's office, Cape Wind Associates LLC, the Massachusetts Department of Energy Resources, and Nantucket Electric Co. and Massachusetts Electric Co., both d/b/a/ National Grid.
Under the terms of the agreement, ratepayers will realize a savings of up to $456 million during the 15-year life of both of the proposed contracts resulting from an approximate 10% reduction in the price for the full project.
There is potential for additional savings for customers, including up to $55 million related to federal loan guarantee savings, as well as savings for reductions in project costs, an option to purchase below market power in the future and a contract price reduction under certain circumstances, according to the attorney general.
Under the original terms of the contracts, as negotiated by National Grid and Cape Wind, the price of electricity from the Cape Wind project would start at $0.207/kWh in 2013 and increase by 3.5% per year.
Pursuant to the agreement in principle, Cape Wind and National Grid have agreed to revise their contracts by doing the following:
– Reducing the starting price of electricity for year 2013 from $0.207/kWh to $0.187 cents/kWh with an escalation factor of 3.5% per year, if the entire project is built. If only a portion of the project is built, the starting price will be capped at $.0193/kWh;
– Adjusting the contract price downward if Cape Wind achieves savings by receipt of a federal loan guarantee or a reduction in construction costs;
– Limiting National Grid's ability to commit additional ratepayer funds to the Cape Wind Project through expansion of its contract with Cape Wind;
– Providing National Grid with the option of purchasing additional energy from Cape Wind, on behalf of ratepayers, after the expiration of the contracts at a significant discount from market rates; and
– Expanding an existing-price match guarantee if Cape Wind develops additional wind projects and offers to sell its power at a lower cost.
The parties intend to submit a formal settlement agreement and revised contracts to the Department of Public Utilities. The revised contracts will be subject to full Department adjudicatory review. National Grid and Cape Wind have asked that the contracts be approved by Nov. 15.