Economy/ Energy

Eversource’s view appears to depend on where it sits

Company on both sides of the table in wind farm contract talks

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NEW YORK wind farm developers earlier this week said they needed more money from ratepayers to get their projects off the ground, which had to be a tad embarrassing for Eversource and its CEO, Joe Nolan.

Eversource is best known in Massachusetts as the state’s largest utility, but it also has tried its hand at offshore wind with its partner Orsted. Eversource’s dual role means it sits on both sides of the offshore wind negotiating table. In Massachusetts, Eversource the utility has negotiated deals with offshore wind developers on behalf of ratepayers. In New York, Eversource the offshore wind developer has negotiated its own offshore wind deals with New York regulators.

Last year, Eversource negotiated power purchase agreements with Commonwealth Wind and SouthCoast Wind in Massachusetts. Months after the deals were done, the two wind farm developers came back to Eversource and Massachusetts regulators and said rising interest rates, inflation, supply chain disruptions, and the war in Ukraine had made the contracts unworkable. They asked for some pricing adjustments.

Eversource, the other Massachusetts utilities, and the Department of Public Utilities all said no. A deal is a deal, they said.

Nolan, in an interview in mid-December with an investment firm, was quite adamant about not reopening the contract. According to a transcript of the interview, he suggested the wind farm developers had bid too low and shouldn’t be allowed to get out of the deal now that economic circumstances had changed.

“This is the price they bid, so that we are not going to renegotiate those contracts under any circumstances. So no matter what they say, that’s not going to happen,” he said. 

Fast forward to this week, and the shoe (or the pricing problem, to be more exact) is on the other foot. Sunrise Wind, a joint venture of Orsted and Eversource, filed motions with New York regulators asking for pricing adjustments to the wind farm contract they negotiated in 2019 because of inflation, supply chain disruptions, and the war in Ukraine.

“These unanticipated, extraordinary economic events beyond Sunrise Wind’s control have upended its careful financial and developmental planning for the project,” the companies said in their filing with state regulators.

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Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

In both New York and Massachusetts, the outcome of the negotiations over the adequacy of the previously signed wind farm power purchase agreements is still unclear.  And while the debates in both states seem strikingly similar, Eversource spokesman William Hinkle said in an emailed statement that there is a distinction between Massachusetts and New York.

“Our regulated businesses at Eversource operate independently of the unregulated affiliate that is a member of the joint venture with Orsted, and there is a significant distinction between that venture and our responsibility to serve Massachusetts customers as an electric distribution utility in the Commonwealth,” he said. “In Massachusetts, the law sets a minimum price cap that Eversource was not at liberty to change, and there is no process by which a DPU-approved contract can be amended following approval; whereas in New York, there are policy considerations and a process by which a petition of this nature can be considered.”