Cape Wind seeks utility deal tie-in
Merged firms would buy power
Cape Wind Associates, the company behind the 130-turbine wind farm to be built in Nantucket Sound, are urging Massachusetts regulators to require that a merger between NStar and Connecticut-based Northeast Utilities include a condition to buy 50 percent of the power generated by the offshore wind project.
“Think big,’’ said Dennis Duffy, vice president of Cape Wind Associates, who last week filed a letter to the state Department of Public Utilities asking officials to make NStar and Northeast Utilities purchase “the remaining output of the CWA project.’’
Other groups watching the case, including the state Department of Energy Resources and the nonprofit Conservation Law Foundation, made similar entreaties, asking regulators to compel the utility companies to enter a long-term contract to buy electricity from a wind farm.
Cape Wind has been on the hunt for more customers since National Grid, one of the state’s largest utilities, agreed more than a year ago to purchase half of Cape Wind’s power. Securing another customer would cement Cape Wind’s viability, and help attract investors who can finance the wind farm’s construction. Many have long viewed NStar as the most likely candidate.
NStar spokeswoman Caroline Allen said the utilities plan to respond to all the recent filings and recommendations about the merger by next week, as required by the state. The deal would create a $17.5 billion energy company serving nearly 3.5 million customers.
“We would hope that any decision on Cape Wind would not affect any decision on our merger,’’ Allen said.
Mark Rodgers, a spokesman for Cape Wind, said the company has been working to sell the other half of its project’s power but declined to go into detail.
The project, which some estimate will cost more than $2.5 billion, went through years of opposition and legal battles before winning federal approval last year. US officials approved a construction and operations plan for the wind farm earlier this year.
“Cape Wind has had a number of conversations with potential power buyers,’’ Rodgers said. “All of our talks are under confidentiality agreements. Until such time as we are able to make an announcement, we can’t comment further.’’
State Department of Public Utilities officials have been weighing whether to approve a merger between NStar and Northeast, which was announced a year ago.
The Patrick administration, meanwhile, has long been a champion of Cape Wind, helping to promote the project and other renewable energy sources, like solar power, with legislation requiring the state’s four investor-owned utilities to enter into long-term contracts to purchase electricity from renewable energy sources.
Private talks earlier this year between the state and utility executives involved in the NStar and Northeast merger apparently focused on restrictions prohibiting the companies from seeking new rate increases for a number of years, and a commitment to buy a significant percentage of the power Cape Wind expects to generate.
“We have had discussions with officials of NStar regarding the possible purchase of Cape Wind power by the utility,’’ said Mark Sylvia, commissioner of the state Department of Energy Resources. “To the extent that purchasing power from Cape Wind would have a positive impact on the state’s clean energy development and greenhouse gas reduction goals, it would be a welcome step.’’
Sylvia’s agency, however, has not specifically called for NStar to do business with Cape Wind as a condition of its merger with Northeast.
In a filing made last week that made no mention of Cape Wind, energy resources officials told utility regulators the proposed partnership should hinge on a combined entity signing a 15-year-contract to buy nearly 130 megawatts of wind-generated electricity. That amount equals about 2 percent of NStar’s electric load, and is also equal to almost 30 percent of Cape Wind’s total output.
In a separate filing to regulators, the Conservation Law Foundation, an environmental advocacy group participating in the merger proceedings, also called for a long-term contract by the merged utility “to meaningfully facilitate the financing of offshore wind energy.’’
Attorney General Martha Coakley, acting as the state’s ratepayer advocate, called on regulators last week to impose a five-year rate freeze, or credit customers with more than $300 million in expected savings, before approving the proposed merger.