BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Friday that her office has reached a deal with Cape Wind Associates that will reduce the costs for ratepayers on a proposed contract by nearly 10 percent.
The agreement in principle, which will reduce costs by as much as $450 million over the course of the 15-year life of the contract, was agreed to by Cape Wind Associates, the Massachusetts Department of Energy Resources and Nantucket Electric Company and Massachusetts Electric Company, both doing business as National Grid.
"On behalf of National Grid's customers, we have reached an agreement that we believe is a much fairer deal for ratepayers and will reduce the proposed costs for consumers and businesses by up to $450 million over the life of the contract," Coakley said.
"This agreement accomplishes two important goals-working to develop renewable energy, specifically off-shore wind in Massachusetts, and ensuring customers get the benefits of this project under a much fairer price than what was originally proposed."
The contract originally negotiated between National Grid and Cape Wind called for the price of electricity for a project to begin at 20.7 cents per kilowatt hour in 2013, increasing by 3.5 percent per year. With an effort to make the contract more beneficial for ratepayers, the companies revised the contract.
The new contract has the starting price of electricity for the year 2013 now at 18.7 cents per kilowatt hour with the same 3.5 percent per year escalation if the entire project is built. If only a portion is built, the price will be capped at 19.3 cents per kilowatt hour. The price will also be adjusted downward if Cape Wind receives a federal loan guarantee or a reduction in construction costs
Under the new deal, National Grid will be limited in its ability to commit additional ratepayer funds to the Cape Wind Project through expansion of its contract with Cape Wind. National Grid also has the option of buying additional energy for ratepayers once the contracts expire for a price significantly discounted from market rates.
If Cape Wind develops additional wind projects at a lower cost, it must offer National Grid an existing price match guarantee.
A formal settlement agreement and revised contracts will be submitted to the Department of Public Utilities soon and will be subject to full department adjudicatory review. Both companies are seeking to have the contracts approved by November 15 of this year.