Press Release - New Federal Lawsuit Would Void No-Bid Cape Wind Contract

January 21, 2014

Media Contact:
Audra Parker, Alliance to Protect Nantucket Sound

Cape businesses, residents, and the Alliance to Protect Nantucket Sound join the Town of Barnstable in challenging the overpriced NSTAR power contract for violations of federal law

BOSTON (January 21, 2014) – NSTAR’s no-bid contract to purchase electricity from Cape Wind at three times the price of competing out-of-state green energy violates federal law and would put an unfair burden on ratepayers, according to a suit filed in U.S. District Court today by the Town of Barnstable, businesses, residents, and the Alliance to Protect Nantucket Sound. This action is one of several pending legal challenges to Cape Wind, the controversial offshore wind project proposed between Cape Cod, Martha’s Vineyard, and Nantucket.  

The suit against Massachusetts regulators, NSTAR, and Cape Wind says the State discriminated against out-of-state power companies – despite their lower costs – by pressuring NSTAR to buy power from an in-state energy company, Cape Wind.  Massachusetts regulators also exceeded their authority in setting wholesale rates for this contract, an action reserved for the Federal Energy Regulatory Commission (FERC).

“This state action was illegal for two independent reasons.  First, it constituted illegal discrimination in favor of an in-state business, in violation of the dormant Commerce Clause of the U.S. Constitution,” the suit alleges. “Second, it constituted illegal regulation of wholesale electricity sales, in violation of the Federal Power Act and the Supremacy Clause of the U.S. Constitution.” States may not promote green power by “dictating that such projects receive favorable rates and terms for their wholesale electricity sales.”

The Alliance to Protect Nantucket Sound, residents, and local businesses, including the Keller Company of Hyannis, Marjon Print and Frame Shop of Hyannis, and Hyannis Marina, have joined the Town of Barnstable in filing the lawsuit.

“We understand the need for green sources of energy, but it is unfair to be forced to pay three times the cost of other green energy for Cape Wind,” said Joe Keller, President of Keller Company Inc. “It is difficult enough to run a business in this state without having to pay exorbitant electric bills that are totally unnecessary.”

The suit points out that NSTAR sought to comply with the Massachusetts Green Communities Act requirement that a percentage of power come from renewable sources by buying green energy that was cheaper than Cape Wind.  However, the complaint alleges that state regulators refused to support NSTAR’s long-sought merger with Connecticut power company, Northeast Utilities, until NSTAR contracted to buy the higher priced Cape Wind power. 

“According to NSTAR’s own estimates, the unconstitutional NSTAR–Cape Wind contract will increase the electricity bills of NSTAR customers by nearly one billion dollars over the life of the contract,” the suit alleges.

Audra Parker, the President and CEO of the Alliance to Protect Nantucket Sound, said, “We are confident the suit will succeed.  It is yet another example of the many legal deficiencies characterizing state and federal decisions that have been made in favor of Cape Wind.”  Furthermore, recent court decisions in New Jersey and Maryland found that state programs directing utilities to sign long term contracts were unconstitutional and raised questions regarding the authority of states in general to direct utilities to purchase wholesale energy under specific state mandates.

“Our case alleges that NSTAR was coerced into signing a no-bid contract that violates federal law, discriminates against affordable green power producers from out of state, and burdens small businesses and municipalities with unnecessarily high electricity costs,” Parker said.  “The State’s actions on the Cape Wind contract are even more disturbing given the increasing availability of alternative energy sources available at a fraction of the price of Cape Wind.”

The NSTAR suit is one of several lawsuits pending against Cape Wind, which, due to its controversial location and high costs, continues to struggle 13 years after first being proposed.   Numerous plaintiffs, including the Wampanoag Tribe of Gayhead/Aquinnah, Public Employees for Environmental Responsibility, the Town of Barnstable, the Alliance, and others have filed lawsuits based on violations of federal law in the permitting of Cape Wind made by the Federal Aviation Administration, the Department of Interior, the U.S. Coast Guard, and other agencies.