The Cape Wind deal to sell the electric power that the planned Nantucket Sound wind farm may one day produce will certainly cost electricity end-users more than conventionally produced power. National Grid agreed to buy half the power Cape Wind creates and, in addition, bought the right to award the other half to a utility such as NSTAR, or another retail supplier, as it chooses. The first half was worth $3 billion to Cape Wind, the second a similar amount. Altogether, the deal will help Cape Wind finance creation of the 130-turbine wind energy plant at Horseshoe Shoals.
National Grid is one of four suppliers that serve Massachusetts customers, including National Grid, NSTAR, Western Massachusetts Electric Co., and Unitil Corp. The state requires the four investor-owned utilities to buy a growing percentage of the power they sell from renewable energy providers.
National Grid will pay 20.7 cents a kilowatt hour for 50 percent of Cape Wind’s energy when it first comes online, perhaps in 2013. The price will increase by about 3.5 percent a year for 15 years, for about $3 billion in potential revenue for Cape Wind. The price, which includes a state-required renewable energy subsidy of 6.1 cents per kilowatt-hour, is well above the current price of electricity from conventional power sources. To provide basic residential service, National Grid currently pays 8.11 cents per kilowatt hour for the power alone, not counting distribution or transmission charges, according to the company’s website.
So, end-users will pay a premium for environmentally friendly wind power that amounts to about one-third of the contract costs, according to numbers in a National Grid filing made to the Massachusetts Department of Public Utilities (DPU).
The DPU will review the National Grid/Cape Wind long-term agreements in three public hearings. The nearest is Monday, June 21, 6 pm, at Nantucket High School. Hard-pressed homeowners and bottom line minded business owners ought to testify in force. The first hearing was yesterday in Bridgewater. The third will be in Worcester, June 22.
Attorney General Martha Coakley has said she will review the National Grid deal. The state’s poorly thought out but relentless political push for wind power suggests that General Coakley will not prove a shield for rate payers or for the environment, but the DPU and the attorney general are charged with protecting state residents from unreasonable utility pricing. The word from political leaders, business groups, and consumer advocates is that the proposed high rates will harm residential and commercial consumers. And a survey conducted by the UMass Center for Policy Analysis found that a majority of consumers object to paying more for wind energy. Ratepayers must press General Coakley and the DPU to do their jobs.
As Tennessee Senator Lamar Alexander (R) wrote in the Wall Street Journal on June 11, in an essay describing a sensible approach to a national energy policy, “Stop pretending wind power has anything to do with reducing America’s dependence on oil. Windmills generate electricity — not transportation fuel. Wind has become the energy pet rock of the 21st century and a taxpayer rip-off.
“According to the Energy Information Administration, wind produces only 1.3 percent of U.S. electricity but receives federal taxpayer subsidies 25 times as much per megawatt hour as subsidies for all other forms of electricity production combined. Wind can be an energy supplement, but it has nothing to do with ending our dependence on oil.”
To taxpayer rip-off, Mr. Alexander might have added ratepayer rip-off.