NEW YORK OFFICIALS followed the lead of regulators in Massachusetts on Thursday, rejecting bids by four offshore wind developers to renegotiate the prices they were awarded in previously approved contracts because of sharply rising and unexpected costs.

The decision means the developers will have to either stand by the terms of their current contracts — which they say are unable to do because the prices are no longer sufficient to obtain financing — or cancel the agreements, pay termination fees, and possibly rebid their projects in future procurements.

The ruling by the Public Service Commission raises questions about whether New York will now be able to reach its 2030 goal of building a power grid with 70 percent of the electricity coming from renewable sources. But members of the commission unanimously held that granting huge prices increases to the developers in a non-competitive process would undermine the state’s regulatory framework.

“While we do not doubt that recent national and global events have affected electric generation developers, we are not confident that the relief proposed in the petitions would adequately protect ratepayers,” the commission said in its ruling. “As explained below, granting the requested relief would result in significant rate impacts unsupported by the discipline of competitive solicitation without providing commensurate assurance that the projects at issue would be developed in a timely and cost[1]effective fashion.”

Massachusetts regulators reached a similar conclusion, although the details of the arrangement were worked out largely behind closed doors and not discussed in a formal decision by the Department of Public Utilities. For that reason, the New York decision offers some insights on the challenges facing offshore wind developers and regulators in a changing economic environment.

In Massachusetts, offshore wind developers last year initially sought to reopen their power purchase agreements for 2,400 megawatts of capacity but were rebuffed by the DPU. The developers, Avangrid and the team of Shell New Energies and Ocean Winds North America, subsequently terminated their deals and paid financial penalties totaling $108 million. The DPU approved the terminations with no comment and the two companies are expected to rebid their projects next year.

New York offshore wind developers went a slightly different route. They formally appealed to the state’s Public Utilities Commission for pricing adjustments to their original deals, which were signed in 2018 and 2020 with the New York State Energy Research and Developmen Authority, or NYSERDA. The wind farms, with a total capacity of 2,960 megawatts, are called Sunrise Wind, Empire Wind 1 and 2, and Beacon Wind. Sunrise Wind is being developed by Orsted and Eversource, while the other wind farms were being developed by Equinor and bp plc.

In its petition to renegotiate the price for its power, Sunrise said inflation, interest rates, steel prices, and other costs had had increased significantly since the start of the war in Ukraine. Inflation, for example, had increased from 2 percent at the time of Sunrise’s original bid to 4.7 percent in 2021 and 8 percent in 2022.

“The petition also identifies how unexpectedly rapid growth in the global offshore wind market, due in large part to Europe’s response to the war in Ukraine, has created supply chain bottlenecks and driven prices of turbine components and various other capital and operational project inputs higher,” according to the commission’s decision.

Sunrise also said the cost of connecting its wind farm to the power grid in New York had increased. The developer had set aside $22 million for interconnection and transmission upgrade costs, but the true cost, according to Sunrise, had risen by $93 million to $115 million.

Sunrise argued in its petition that reopening the contract would be less expensive in the long run because rebidding would result in “significant delay and likely a higher … strike price for an offshore wind project of comparable size than what would follow from granting the requested relief.”

At another point in the decision, the commission said the wind farm developers believed that granting relief would “yield savings for ratepayers both by putting downward pressure on wholesale electricity market prices and because the costs of developing offshore wind resources on the East Coast are expected to continue increasing through 2030.”

The commission acknowledged the risk of canceling the existing contracts, but said “the ratepayer impacts of the requested relief are unjustly significant, especially as these adjustments would be arrived at outside of NYSERDA’s competitive solicitation process.”

An analysis of the pricing adjustments sought by the companies indicated they were substantial and not uniform. For a residential customer using 600 kilowatts of power a month, the monthly bill would go up anywhere from $4.09 a month to $6.28 a month, or as much as 4.4 percent to 6.7 percent. Statewide, the dollar impact ranged from $948 million a year to $1.45 billion a year.

Jason Grumet, the CEO of the American Clean Power Association, said the decision was a major setback for the offshore wind industry and customers who would benefit from the production of more clean energy. “With one shortsighted decision, the [New York Public Service Commission] has thrown New York’s environmental and clean energy future into peril. Absent a robust offshore wind industry, it will not be possible for New York State to achieve its climate or environmental justice goals,” Grumet said in a statement.