Mass. Supreme Judicial Court Affirms Cape Wind–National Grid PPA

The Massachusetts Supreme Judicial Court (SJC) last week upheld a decision by the state’s Department of Public Utilities (DPU) that a Power Purchase Agreement (PPA) between Cape Wind and utility National Grid would be a cost-effective use of ratepayer money. The decision means Cape Wind is closer to building North America’s first offshore wind farm.

The court denied a motion filed against the 2009 PPA by the Alliance to Protect Nantucket Sound. The alliance’s motion had sought to appeal a decision by the DPU, which last year refused to reopen the closed record of a proceeding in which it approved the PPA. In its motion to the SJC, the alliance said it wanted to introduce evidence—unredacted documents filed with the DPU by NSTAR Electric Co. that showed different rates—even though the DPU said the documents would not have had a significant impact on its decisions.

“The record … already did include evidence relating to the pricing of other available renewable energy resources located both outside of and within the Commonwealth," Justice Margot Botsford wrote in the court’s decision. "The department did not abuse its broad discretion in declining to reopen a closed record in a completed proceeding in order to accept more information on the same points."

“In sum, our review of the record indicates that there was clearly sufficient evidence of which the department could base its conclusion that the special benefits of [the PPA] exceeded those of other renewable energy resources, and we uphold the department’s conclusion that approval of the contract was in the public interest.”

The court also noted the DPU’s finding that Cape Wind would lower regional energy costs through “price suppression,” described as “the reduction of wholesale energy market clearing prices that results from the addition of low-cost generation resources.”

Cape Wind is a proposed 24-square-mile offshore wind farm comprising 130 turbines. National Grid has agreed to buy half the power generated by the 468-MW farm. Initially, the PPA contract called for 20.7 cents/kWh with an increase of 3.5% annually over 15 years. A new contract calls for 18.7 cents with the same escalation, though the price will be capped at 19.3 cents.

The project, which has so far secured federal and state approval, including a lease to operate by the Department of Interior, must clear a Federal Aviation Administration finding of “no hazard” before it can begin construction. Industry experts point out, however, that Cape Wind still requires a buyer for the remaining 50% of generated power that will not be bought by National Grid.

Sources: POWERnews, Cape Wind, Massachusetts SJC