Shore bet just for utilities
By Audra Parker / As you were saying...
Saturday, June 9, 2012
Energy policy shouldn’t be made in secret meetings, especially meetings where the final outcome of the backroom deals costs all of us billions.
NStar wildly overpaid for Cape Wind’s bloated electric costs for one simple reason: The Patrick administration would not approve NStar [NST]’s lucrative merger with Northeast Utilities (NU) unless it gave Gov. Deval Patrick and Cape Wind what they wanted. And what did they want? Nearly $1 billion of unnecessarily high electric bills for residents, businesses and municipalities, and that was to cover the purchase of just one quarter of Cape Wind’s power.
Patrick and his allies get to claim they birthed the first offshore wind project. NStar and NU executives get their merger and likely millions of dollars in bonuses that come with it.
What do you get? The bill.
The 2012 NStar contract with Cape Wind is Exhibit A in an increasingly strong case that the Patrick administration, the attorney general’s office and utility lawyers and leaders have become far too close, and far too private, when attempting to strike such deals.
Between the National Grid purchase of Cape Wind power and this deal, the state has played a heavy hand in saddling Massachusetts ratepayers with a total of nearly $4 billion in above market costs for a single project that would provide only 1 percent of New England’s electricity.
The Patrick administration’s merger-driven pressure on NStar to buy 27.5 percent of Cape Wind power is well documented. What’s less known is what transpired in the widely reported closed-door meetings that took place among the Patrick administration, the attorney general’s office and NStar.
As the public review process was playing out, these three groups were meeting privately to hammer out concessions that would lead to a multi-billion dollar merger.
First, of course, there was the Patrick administration’s 2008 Green Communities Act, which the Beacon Hill Institute referred to as the “Cape Wind Sweetheart Deal Act.” This act allowed utilities to pass surcharges onto customers and limited purchasable renewable energy to those projects generating on Massachusetts land, or in state or adjacent federal waters.
With that legislation in place, the state stepped in to broker a deal for Cape Wind. On Nov. 28, 2009, in an email obtained under the Freedom of Information Act, Ian Bowles, then secretary of Energy and Environmental Affairs, wrote to Patrick: “I expect to convene CW (Cape Wind), Grid and AG (attorney general) staff Monday in hopes of agreeing on MOU (Memorandum of Understanding) . . . It would be worldwide news if/when it comes together . . .” The MOU was signed Dec. 1, 2009.
Then, in May 2010, just one day after being given a massive rate increase for the first time in 14 years, National Grid announced it would buy 50 percent of Cape Wind’s power at an outrageous 20.7 cents per kilowatt hour (kwh), and climbing to nearly 35 cents in the final year of the contract. Compare that number to the average market rate of 8 cents per kwh.
Over the past year, the price of natural gas has fallen, making Cape Wind an even worse deal for Massachusetts businesses and households. With Cape Wind’s ever elusive construction start date being pushed forward in the NStar contract and with no federal handouts, the price tag could soar even higher.
Nearly $4 billion in ratepayer money is going out the door from the public, and we can expect tens of millions is going into the pockets of utility chiefs. It’s time someone looked at how such a lopsided deal was struck.
Audra Parker is president/CEO of the Alliance to Protect Nantucket Sound.