Report: Utilities raised concerns on Mayflower
Worried about failure or substantial delays of wind farm
THE UTILITIES THAT SELECTED Mayflower Wind for the state’s second offshore wind procurement raised serious concerns at several stages of the process about the company’s ability to complete the project by 2025, according to a report by an independent firm hired to monitor the contracting process.
The report by Peregrine Energy Group is heavily redacted in parts, so it’s impossible to know exactly what the concerns were. “The risks were those pertaining to the potential for project failure or, at least, substantial delay to the proposed commercial operation date,” the report said. “This was relevant as to whether the top-ranked bid should not be selected because another bid, otherwise highly ranked, is evaluated as having a substantially higher likelihood of being built.”
According to the Peregrine report, Mayflower ranked tops in the evaluation process with a score of 84.5, followed by a second bidder whose name was redacted who had a score of 84. Three firms – Mayflower, Bay State Wind, and Vineyard Wind – submitted a number of proposals for the offshore wind procurement. Mayflower declined comment.
Concerns about Mayflower’s ability to complete the project were such that Eversource, one of the utilities, pushed for some additional accelerated critical milestone dates in the contract that would trigger penalties if they were not met. The debate over the milestones apparently became heated, with Peregrine raising questions about whether Eversource had ulterior motives.
“While recognizing the development challenges of the Mayflower project and the legitimacy of the [utilities’] underlying concerns, [Peregrine] posed the question of how hard the [utilities] should push Mayflower on this matter,” the report said, referring to the milestones. “Subsequently, the parties achieved a negotiated resolution.”
Despite the controversy over Mayflower, Peregrine indicated the selection process proceeded fairly smoothly, building on the experience gained from previous renewable energy procurements. “It is Peregrine’s assessment that overall the [utilities]fairly negotiated the contracts that have been submitted for the Department’s approval,” the report said
During the bid process, Mayflower offered three basic proposals – one that offered its lowest price, one that offered a slightly higher price but more onshore investment, and one that offered the highest price but the most onshore investment. Mayflower had said the price on all three options was less than what Vineyard Wind bid during the first offshore wind procurement.
In its report, Peregrine said there was great debate among the utilities about how to evaluate the value of Mayflower’s proposed onshore investments. Ultimately, the report said, the utilities concluded the cost for each job created by onshore investments was far too high and didn’t warrant the higher price for electricity.The utilities reached that conclusion after talking to the Executive Office of Housing and Economic Development about subsidy programs it operates that yield full-time, non-construction jobs at a cost of $5,000 to $11,233 per job. By contrast, the Peregrine report said, the comparable price for the onshore wind investments was $270,000 per job, or $157,000 after taking into account other investments by Mayflower.
Peregrine made one recommendation for future reviews of renewable energy procurements, suggesting that the company monitoring the process be copied on every electronic message made by the parties so it could follow along on a real-time basis. Peregrine did not criticize the utilities for withholding information, but pointed out that real-time access to data and other information would help the process move more smoothly.