NStar Corp. quietly filed with state regulators late last week three wind-power contracts that will provide electricity at prices that are both competitive with fossil fuels and significantly cheaper than Cape Wind.
State law requires Massachusetts utilities to solicit long-term contracts for renewable power for at least 3 percent of their load. National Grid, the state’s largest utility, satisfied the requirement by negotiating a contract for half of Cape Wind’s power output.
NStar, the state’s second-largest utility, went a different route. Concerned about the high cost of Cape Wind, NStar twice went through a competitive bidding process for wind projects. The first process was completed but then shelved after the law’s requirement that only Massachusetts projects were eligible to bid was challenged in court.
The second bid process was opened to projects across the Northeast, and the results were encouraging for renewable energy fans. NStar signed 10-year contracts with Hoosac Wind in western Massachusetts and Groton Wind in New Hampshire and a 15-year contract with Blue Sky East in Maine. The three projects have a combined output of 109 megawatts of power, about 1.6 percent of NStar’s load. The Hoosac and Groton projects are owned by Iberdrola SA of Spain and the Blue Sky project is owned by First Wind of Boston.
NStar blacked out all the pricing data in the contracts, but there’s enough information in them to draw some general conclusions about their cost. For example, utilities typically compare the price of their renewable energy projects against a forecast of future market-rate electricity prices prepared by the consulting firm Levitan & Associates. NStar’s says its three wind power contracts come in $111 million below Levitan’s market estimates. By contrast, National Grid says its 15-year deal with Cape Wind will come in more than $1 billion above Levitan’s market estimates.
Exact comparisons of the two projects are difficult to make because they differ in size, but one industry official who reviewed the NStar contracts carefully tells me that he believes NStar is paying less than 10 cents a kilowatt hour for the wind power. By contrast, National Grid is paying Cape Wind 18.7 cents per kilowatt hour. The Cape Wind contract price also rises 3.5 percent a year, while the NStar contracts offer fixed prices for the duration of the contracts.
The NStar filings also indicate that opening up the bidding process to a wider field saved ratepayers money. NStar estimates it shaved at least $139 million off its costs by accepting bids from across the Northeast.
Given all the good news, one might wonder why NStar isn’t publicizing it. After all, the low prices for renewable energy give a significant boost to the state’s bid to go green. But NStar isn’t saying much of anything. The utility didn’t hold a press conference and didn’t even issue a press release.
NStar is probably keeping a low profile because, separately, it is seeking Patrick administration approval for a merger with Northeast Utilities. State regulators are considering changing the way they evaluate such mergers, withholding their approval if the merger fails to yield significant consumer benefits. Many think the Patrick administration, which has made Cape Wind a centerpiece of its energy initiatives, may use this new measuring stick to pressure NStar into buying the other half of Cape Wind’s power output.
NStar’s bid process for wind power suggests projects are out there with far lower costs than Cape Wind, but utility officials aren’t saying no to Cape Wind as they seek to expand their renewable energy portfolio to comply with state mandates.
“We’ll be looking to secure more renewable energy in the future,” said Caroline Allen, an NStar spokeswoman. She wouldn’t address Cape Wind specifically, but added: “Every project is on the table.”