Approve National Gridís deal with Cape Wind

From the Boston Globe
By George Bachrach
August 11, 2010
 
After nearly 10 years of intense technical review, Cape Wind has received government permitting from an endless array of local, state, and federal agencies. Now the only question is whether it is cost effective. The answer is a resounding yes.

The first test is the marketplace itself. National Grid has offered to purchase half of Cape Wind’s clean energy, starting in 2013, at 18.7 cents per kilowatt-hour, down from an initial offering of 20.7 cents a kilowatt-hour. By comparison, last year’s average cost for off-shore energy in Europe was 20.9 cents a kilowatt-hour. Cape Wind’s cost also includes a fee of six cents, required by the government, so the true cost is 12.7 cents per kilowatt-hour.

Nonetheless, these numbers are distorted by opponents who argue consumers will be forced to pay the 18.7 cents, or roughly twice the current cost of energy. Not true.

National Grid’s 18.7 cents is not the cost to consumers, and they will not see it on their bills. It is simply the cost National Grid pays Cape Wind. National Grid in turn mixes this energy and cost into its overall cost structure. Consumers will only pay an additional $1.57 per month. Is that too much to pay for clean, renewable energy?

Attorney General Martha Coakley, representing ratepayers in the ongoing Department of Public Utilities rate setting hearings, was instrumental in renegotiating the base price down to 18.7 cents per kilowatt-hour. As a result, in 2013 Cape Wind’s energy will likely be the cheapest off-shore energy in the world.

Having lost the environmental argument, critics still argue any cost increase is bad for business. Mega-store WalMart has surfaced to challenge the contract. But if it’s bad for business, why do so many other major Massachusetts companies support Cape Wind, including Millipore, Legal Sea Foods, the Saunders Hotel Group, and many more? All are major energy consumers, employers of thousands, and all understand the underlying costs of doing business. They want the price stability and predictability Cape Wind offers. They want to be free of the price volatility of foreign oil. It’s tough to develop a business plan for expansion and job growth if you can’t predict costs.

But this analysis must also include ancillary economic and environmental benefits. Cape Wind will create thousands of construction and maintenance jobs. As the first offshore wind farm in America it will establish Massachusetts as an industry leader and spin off new companies and job growth apart from this project.

In addition, Cape Wind’s new energy supply will put downward pressure on wholesale electric costs by displacing the highest price electric sources in the system . . . classic supply and demand. And because sea breezes are steady, Cape Wind’s supply will produce above-average wind power during the costliest demand periods of summer’s peak hours.

Finally, Cape Wind will also help us meet our obligations under the state’s Global Warming Solutions Act, which requires a reduction of greenhouse gas emissions by 10 to 25 percent by 2020, as well as the Regional Greenhouse Gas Initiative, which requires utilities to purchase and provide consumers with a higher percentage of clean and renewable energy. We will finally begin to seriously combat global warming.

And none of this calculates the cost of our military intervention in the Middle East, often linked to our addiction to oil. Imagine a world where we can say no to OPEC’s spiraling prices and keep our troops and money at home?

The DPU is now reviewing the Cape Wind-National Grid contract. The scrutiny is appropriate, but the contract should be approved. No project can get financing without a customer and long-term contract in place. And if financing is not in place by year’s end, Cape Wind will lose federal incentives available to every other clean energy project. If Cape Wind fails it will send a terrible message to others willing to build offshore wind farms in America, and the nation will fall further behind Europe, China, and the rest of the world.

George Bachrach is president of the Environmental League of Massachusetts.

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