The Associated Industries of Massachusetts (AIM) has asked the Massachusetts Supreme Judicial Court to set aside the commonwealth's recent approval of a power purchase agreement (PPA) between National Grid and Cape Wind.
AIM argues that approval of the deal by the Department of Public Utilities (DPU) was ‘arbitrary, capricious,’ an ‘abuse of discretion and not otherwise in accordance with the law.’
AIM believes the agreement sets a precedent for allowing utilities to negotiate expensive power agreements outside of the competitive bidding process and to allocate the costs of those contracts unfairly to commercial and industrial customers. The association filed a petition to appeal with the DPU and the Supreme Judicial Court.
The DPU approved the PPA between National Grid and the 130-turbine offshore Cape Wind project on Nov. 22. It was the first such agreement ever approved under a provision of the Green Communities Act allowing utilities to sign long-term contracts for renewable power directly with generators.
Mark Rodgers, communications director for Cape Wind, does not think AIM's challenge will be successful.
‘We are confident that the comprehensive and robust order by the [Massachusetts DPU] approving this contract will withstand any legal challenge,’ he said in a statement. ‘Cape Wind will create over a thousand new jobs in Massachusetts and contribute to greater energy diversity and reliability of our state's energy supply while reducing dependence on imported energy.’
National Grid agreed to purchase 50% of the output of Cape Wind at a cost beginning at $.187/kWh and increasing 3.5% each year for 15 years (extensions possible).
The legal challenge by AIM to the Cape Wind/National Grid contract is based upon the following three issues:
– The contract was not competitively bid;
– The amount of the PPA exceeds 3% of National Grid's load; and
– National Grid's ratepayer allocation of the above-market costs of Cape Wind is inconsistent with the law and harms ratepayers on competitive energy supply.
However, the DPU order states, ‘All of the parties who have addressed price suppression agree that the Cape Wind facility will reduce wholesale energy prices, although there are different views as to the magnitude and duration of the effect.’