COMMONWEALTH WIND on Tuesday told state regulators that the contracts for electricity it negotiated with the state’s utilities in May need to be renegotiated because of changed economic circumstances.
But the utilities, in their own filing with the Department of Public Utilities, said they had no intention of renegotiating the contracts and they should be approved as drafted. The utilities are Eversource, National Grid, and Unitil.
In their own filings, Attorney General Maura Healey and the Department of Energy Resources also called for the approval of the contracts as written, but never addressed the elephant in the room – the claim by Commonwealth Wind that the contracts as currently written would not generate enough revenue to attract the financing needed to build the wind farm.
The exchange of legal briefs left the 1,200-megawatt project in limbo, and once again created uncertainty about the state’s ability to meet its greenhouse gas emission targets and bring stability to electricity markets.
Commonwealth Wind is the third and largest wind farm approved by Massachusetts regulators. It was selected in a bid process last year and a contract for the electricity was negotiated and sent along to the DPU in May.
The company has since raised concerns that a combination of the war in Ukraine, supply chain issues, rising interest rates, and inflation have changed the construction landscape so much that a renegotiation of the terms is necessary.
Commonwealth Wind is asking the DPU to put off a decision on the electricity contracts for a month to give the parties a chance to scrub the numbers again and come up with changes to make the contracts work. Mayflower Wind, which is developing a 1,200 megawatt wind farm as well, has also called for the one-month delay.
It’s unclear when the DPU might rule on the requests of Commonwealth Wind and Mayflower Wind. Tuesday was the deadline for submissions.
Sy Oytan, a senior vice president for offshore projects at Avangrid Renewables, the owner of Commonwealth Wind, submitted an affidavit to the DPU making the company’s case.
“Commonwealth Wind’s current assessment is that a modest increase in the contract prices for the power purchase agreements, coupled with improvements to the economics of the project that Commonwealth Wind can take (including larger, more efficient turbines, tax credits that may be available under the recently enacted Inflation Reduction Act, and other measures) can restore a positive present net value to the project and allow for a return that is adequate to support financing,” Oytan said.
“Commonwealth has retained third-part experts who are evaluating the effects on ratepayer bills of a modest increase in power purchase agreement prices,” Oytan continued. “Those assessments are preliminary but my current expectation is that they will show that the project would continue to lower ratepayer bills even with the type of modest price increase needed for the project to obtain financing.”
Oytan estimated, even with an increase in the price, the project would still have the second lowest price for an offshore wind project in the United States.
He also said restarting the bid process from scratch would result in much higher prices and significantly delay bringing the wind farm online. The current timeline calls for Commonwealth Wind to come online in 2028.
Healey, who is running for governor, and Gov. Charlie Baker’s Department of Energy Resources ignored Commonwealth Wind’s plea for help in their filings and stood by earlier filings calling for approval of the contracts largely as written.
Representatives of the three utilities that will actually sign the contracts with Commonwealth Wind on behalf of their customers acknowledged but dismissed the wind farm’s viability concerns and its call for a one-month delay in approving the electricity contracts.
“Such a pause is unnecessary, however, given that the companies do not intend to renegotiate the power purchase agreements,” the utilities said in their brief. “The companies request that the department approve the power purchase agreements expeditiously. “