Cape Wind seeks DPU help in selling power
Letter asks that NStar-Northeast be required to buy output
Below is the full text of a letter sent to the Department of Public Utilities by Cape Wind Associates, the developer of the Cape Wind project, requesting that approval of a merger between NStar and Northeast Utilities come with the requirement that the merged companies purchase remaining power generated from the proposed Cape Wind project.
September 28, 2011
VIA FEDERAL EXPRESS & ELECTRONIC MAIL
Department of Public Utilities
One South Station, 2nd Floor
Boston, MA 02110
Re: Joint Petition for Approval of Merger between NSTAR and Northeast
Utilities; D.P.U 10-170; Initial Post-Hearing Comments of Cape Wind.
Dear Mr. Marini:
Cape Wind Associates, LLC (“CWA”) hereby submits its initial post-hearing comments in the above-referenced proceeding. As discussed in greater detail below, CWA requests that the Department condition its approval of the proposed merger transaction in a manner that would assure net benefits to the public, with specific respect to the greenhouse gas and renewable energy policy agendas of the Commonwealth. In particular, such conditions should include the purchase by the Applicants, as merged entities, of the remaining output of the CWA project. Such a condition would be entirely consistent with the standard of review previously articulated by the Department in this proceeding, as well as the record evidence, including uncontroverted evidence submitted by the Applicants, demonstrating substantial and long-term shortages of the otherwise available renewable energy required to meet statutorily established requirements (e.g., Exh. JP-4, Pre-Filed Testimony of Susan F. Tierney, PhD., at 87, 140; Exh. ENE-2-1(h), at 8). Such a condition is also consistent with the Department’s prior adjudicatory findings in D.P.U. 10-54 that “the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource …. [and] that these benefits outweigh the costs of the project” and that “offshore wind will be necessary to comply with the aggressive targets of the GWSA.” Id. at xviii, 179. The Department further emphasized the “unique” benefits of the Cape Wind project to Massachusetts that “far exceed” those of other potential sources. Id. at xxi, 228.
The Joint Petition for Merger Approval in this proceeding (“Joint Petition”)represents the first instance where the Department has considered a merger of electric utilities since the passage of the Green Communities Act and the Global Warming Solutions Act (“GWSA”). Section 96 of Chapter 164 sets forth a very broad and discretionary merger review standard of “consistent with the public interest,” and lists several factors which the Department must “at a minimum” consider, thereby implicitly leaving additional factors to the discretion of the Department, based upon the issues and concerns that may be raised in the course of any particular proceeding. Indeed, the Department recently confirmed that its merger review authority is not limited to the enumerated factors: “Although § 96 now mandates that the Department consider the specific factors enunciated in the statute, the Department is not foreclosed from considering the nine factors [including effect on economic development], or a subset of those factors, established in Mergers and Acquisitions. Furthermore, in determining whether a transaction is consistent with the public interest, the Department previously confirmed that it may consider additional factors not delineated in the statute or established in Mergers and Acquisitions. Eastern Edison Massachusetts Electric Merger, at 18; Boston Edison-ComEnergy Merger, at 12; Eastern-Colonial Acquisition, at 6.” Boston Gas-Essex Gas, D.P.U. 09-139, at 16 (2010). Moreover, the GWSA at Chapter 298 of the Acts of 2008 has now added the additional requirement that climate change impacts shall also be considered in connection with any subsequent approval decisions of the Department (the Department “shall also consider reasonably foreseeable climate change impacts….”)
Accordingly, in its Interlocutory Order in Standard of Review of March 10, 2011 in this proceeding, the Department found that “we must also consider the effect of the merger on these [greenhouse gas] emissions, recognizing as well that the electric industry will bear a significant share of the Commonwealth’s burden of obtaining the GWSA’s stringent greenhouse gas emissions reduction requirements. Id. at 26. The Department went on to conclude that: “The Department has previously conducted this evaluation pursuant to a “no net harm” standard, using factors established by case law and statute and we will continue to do so pursuant to a net benefit standard.” Id. at 27. It is also particularly appropriate in this instance for the Department to impose the renewable purchase condition proposed by CWA, as the Applicants have not yet developed or articulated a post-merger renewable and GWSA strategy. E.g., Exh. NRG-1-002 (“NU and NSTAR did not develop, consider or arrive at any renewable generation ‘plan’ as part of the merger negotiations or agreement. There is no plan or strategy in place for the post-merger company.”)
The foregoing should also be considered in light of the position paper presented on behalf of the Patrick Administration on December 17, 2010, entitled A Second Restructuring, which states that the Department should evaluate proposed electric utility mergers based upon a net benefits test that expressly considers the applicants’ “accountability for performance in relation to all public purposes,” including, among other things, whether “a merger would advance the development of the Commonwealth’s solar and offshore wind resources,” and whether a merger “would put more resources into customer service, making energy efficiency services more effective, and ramp up renewable energy on our roofs, on our hilltops and in our waters….” Such statement is set forth in material part below:
[I]n the second restructuring, safety, price, and reliability are not enough. As the last remaining private monopolies, utilities need to be held accountable for their performance in relation to all public purposes. As I mentioned above, the Commonwealth has in 2008 given clarity and direction to a new and vitally important set of public purposes for the energy sector. As such, we need to take performance against their obligation to society, including our clean energy goals, into account in rate cases, mergers, and other state approvals. As we move forward, we need to develop a robust set of incentives and penalties for performance against our clean energy and climate goals – it should grow to become a fundamental part of utility regulation in all aspects.
Id. at 8 (emphasis supplied).
Accordingly, CWA respectfully requests that the Department implement the “net benefits” standard of review consistent with that of the foregoing statement of position and condition its approval of the proposed merger upon the purchase by the merged entities of the remaining output of Cape Wind, and that the Department consider and weigh all relevant factors as it deems appropriate.
Sincerely,Dennis J. Duffy
cc: Service List