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NStar, Cape Wind to talk energy

Utility says it would consider contract to buy electricity

NStar chief executive Thomas May has said that he believes in alternative energy, but is “agnostic’’ about what form it should take. NStar chief executive Thomas May has said that he believes in alternative energy, but is “agnostic’’ about what form it should take.
By Erin Ailworth
Globe Staff / May 22, 2010

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Representatives of NStar will meet with developers of the Cape Wind energy project Monday, the power company says, but whether it will commit to buy electricity from the proposed wind farm is an open question.

“They requested a meeting, and we obliged,’’ said NStar spokeswoman Caroline Allen. “We assume they want to talk about a contract, and we’ll consider it as we would consider any other long-term renewable energy contract.’’

Cape Wind officials did not immediately comment on the pending meeting. The proposed 130-turbine offshore wind farm recently received federal approval for construction in Nantucket Sound.

Earlier this month, 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 when Cape Wind launches in 2013 and to increase that rate by 3.5 percent for the life of the deal. National Grid also signed another similar 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.

Utility commitments to buy Cape Wind power are seen as critically important for the project to obtain construction financing. Early estimates of the cost to build Cape Wind, which has been in the works for nine years, were in the range of $1 billion, but industry observers say the technology has become more expensive. Officials of the project have declined recent requests for new estimates.

Whether NStar will buy Cape Wind’s power has been a matter of increasingly intense speculation in the renewable energy industry.

Sue Reid, an attorney at the nonprofit environmental advocacy group Conservation Law Foundation, said she thinks NStar’s energy portfolio — which already includes wind power from facilities in Maine and New York — would benefit from Cape Wind.

“I think it’s significant, in part given that NStar serves customers who live in the direct vicinity of the Cape Wind project location,’’ Reid said.

In the past, NStar chief executive Thomas May has said that he believes in alternative energy, but is “agnostic’’ about what form it should take, and isn’t counting on Cape Wind to meet state-mandated renewable energy goals. 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.’’

Allen said the utility has other issues to discuss with representatives of the proposed wind project, including how it will connect to NStar’s transmission system on the Cape. She said any contract proposed by Cape Wind officials will be scrutinized by NStar to “see if it makes sense for our customers.’’

NStar customers currently pay a basic service rate of 8.88 cents per kilowatt hour for electricity, which is expected to drop in July. The utility said earlier this week that it is seeking a rate decrease — to 7.98 cents per kilowatt hour — because of a drop in the price of oil, coupled with the discovery of new natural gas supplies.

Opponents of Cape Wind say National Grid’s contract is too expensive for Massachusetts residents, who already pay some of the highest utility rates in the nation. Audra Parker, president of the Alliance to Protect Nantucket Sound, which has long fought the wind farm, said the cost of the project’s electricity will “burden’’ customers of National Grid and now possibly NStar.

“You’re looking at 24 cents if they don’t get the federal subsidies,’’ she said, referring to potential government tax credits for the project. “It’s absolutely a bad deal for ratepayers.’’

Robert Rio, senior vice president of the trade group Associated Industries of Massachusetts Inc., said his organization supports renewable energy, but wants to make sure Massachusetts residents are getting a good deal.

“We believe that people should be looking for the cheapest renewables at the cheapest price,’’ Rio said. “The goal should be to get the most renewable power for the cheapest ratepayer impact, and not to rely upon any one project.’’

Andy Tarsy, executive director of the advocacy group Progressive Business Leaders Network, which has supported Cape Wind, said the local business community is watching NStar closely to see what it will do about Cape Wind.

“I think a lot of business people hope that NStar will step up,’’ he said.

Erin Ailworth can be reached at eailworth@globe.com.

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