IS SOUTHCOAST WIND, the proposed wind farm off the Massachusetts coast previously known as MayFlower Wind, fully committed to the power purchase contract it agreed to with the state’s utilities?
A review of SouthCoast’s regulatory history suggests its owners – Shell New Energies and Ocean Winds North America – are worried the project is no longer economically viable under the agreement because of inflation, rising interest rates, supply chain difficulties, and the war in Ukraine
But SouthCoast has never been willing to say that clearly. Over the last five months, SouthCoast has continuously hedged its bets, acknowledging the economic challenges it faces but never saying the wind farm is no longer viable. Industry insiders say SouthCoast appears to be playing nice with state regulators while letting Commonwealth Wind face criticism for its actions – all the while hoping to piggyback on Commonwealth Wind’s bid to terminate its power purchase agreement.
In May 2022, SouthCoast and Commonwealth Wind, a wind farm being developed by Avangrid, completed negotiations with the state’s three utilities on power purchase agreements for their projects, and moved on to the Department of Public Utilities for final approval.
On October 20, Commonwealth Wind sought a one-month suspension in the proceedings, claiming it needed time to evaluate whether the contracts were still viable given the dramatic shift in the economy.
Seven days later, SouthCoast filed a motion supporting the one-month delay. “A suspension at this time is needed and appropriate because, under the current [power purchase agreements, or PPAs], the resource may no longer be economic and financeable without adjustments to the PPAs,” SouthCoast said.
On November 4, the DPU rejected the bid for a delay and ordered both Commonwealth Wind and SouthCoast Wind to decide whether they were going to move forward or withdraw.
Three days later, SouthCoast said it was moving forward even as it stated that its power purchase agreement is “under the impact of current extraordinary global economic conditions.”
Commonwealth Wind on December 16 moved to terminate its power purchase agreement. Seven days later SouthCoast reaffirmed its commitment to move forward, even as it acknowledged the validity of Commonwealth Wind’s position.
“Notwithstanding the firm commitment [to move ahead] expressed above, [SouthCoast] Wind respectfully must nonetheless agree with much of the factual analysis underlying Commonwealth Wind’s conclusion, especially as [SouthCoast] is subject to these same facts, pressures, and realities,” the wind farm developer said.
The Massachusetts Department of Public Utilities gave final approval to the power purchase agreements of both wind farms on December 30. Avangrid went to court, while SouthCoast watched and waited.
Rhode Island officials got wind of SouthCoast’s hedging and demanded answers on whether the wind farm’s plan to bring electricity ashore in Rhode Island was still moving forward.
SouthCoast in late January said it was urging Rhode Island officials to move forward with their review of the project “despite some of the challenges and commercial uncertainties associated with the development of this complex project in a difficult economic environment.”
Sen. Michael Rodrigues of Westport, the Senate’s top budget official, recently called for Commonwealth Wind to be barred as a bidder on future wind farm projects if it fails to follow through on its current contract. Asked about SouthCoast Wind, the senator said the company had committed to him that it intends to honor its contract. “I have no reason to doubt that,” the senator said.
CommonWealth reached out via email to SouthCoast on Monday, asking whether the wind farm developer was still on board with building the wind farm under its existing power purchase agreement. The email referenced rumors that SouthCoast officials had told state officials privately that it can’t build under the existing agreement, essentially the same message that Commonwealth Wind conveyed in seeking to terminate its power purchase agreement.
A spokeswoman for SouthCoast emailed a response later in the day: “SouthCoast Wind has no comment at this time.”
BRUCE MOHL
FROM COMMONWEALTH
Banking collapse hits homes: The dramatic collapse of Silicon Valley Bank, which purchased one of Massachusetts’ most reliable affordable housing financiers two years ago, is sending shockwaves through community development organizations. Affordable housing organizations and government bodies are waiting for news on a new possible owner for SVB while trying to patch the holes left in the lending system. Read more.
Pushing pricing flexibility: The offshore wind industry is united in supporting pricing adjustments in response to changing economic circumstances on future Massachusetts procurements. The current procurement is floundering without a similar adjustment mechanism. Read more.
Health care expenditures soar: Massachusetts health care expenditures rose 9 percent in 2021, with total spending hitting $67.9 billion. Meanwhile, hospitals say they spent $1.5 billion on temporary staffing, mostly nurses, in fiscal 2022. Read more.
OPINION
No magical solutions: Jim Aloisi, the former transportation secretary and TransitMatters board member, puts forward five ideas for putting the MBTA on an upward trajectory. There are no magical solutions, he says. Read more.
For a strong democracy: Adam Hinds of the Edward M. Kennedy Institute for the US Senate says building a stronger democracy requires civic education and politicians willing to listen to each other. Read more.
FROM AROUND THE WEB
BEACON HILL
Bonnie Heiple is named commissioner of the Department of Environmental Protection. (State House News Service)
MUNICIPAL MATTERS
Two Boston police officers involved in protesting vaccine mandates, one of whom was also the subject of an investigation over his role at the January 6 protests at the US Capitol, have been fired from the department. (Boston Herald)
ELECTIONS
A lawyer hired by the Massachusetts Republican Party is advising the party to drop a lawsuit, initiated under ousted former party chairman Jim Lyons, against the MassGOP treasurer that was part of the internal chaos marking Lyons’s tenure. (Boston Herald)
BUSINESS/ECONOMY
Former Massachusetts congressman Barney Frank, co-author of the Dodd-Frank Act imposing new regulations on banks following the 2008 financial crisis, later pushed to weaken the law and joined the board of Signature Bank, where he’s been paid more $2.4 million since 2015. Frank said the changes made to Dodd-Frank in 2018 had nothing to do with the failure of Signature Bank. (Wall Street Journal)
Business leaders say commercial real estate provisions in the new MBTA communities law could be vital to getting cities and town on board with rezoning plans (MetroWest Daily News)
EDUCATION
Boston school officials are pursuing state funding for a new K-6 school in the Dorchester-Mattapan area that would replace two existing elementary schools. (WBUR)
TRANSPORTATION
A study released this morning by the City of Boston says ridership on the three free MBTA bus lines has returned closer to pre-pandemic levels faster than across bus lines overall, and that nearly half of riders on the three routes are saving money. (Boston Globe)
ENERGY/ENVIRONMENT
As today’s snowstorm wallops the Northeast, the Massachusetts Emergency Management Agency reports tens of thousands were already without power in Massachusetts. (MassLive)