Wind Blown
When the folks who would be able to see the turbines of the Cape Wind development out in Nantucket Sound attempted to block the project on aesthetic and other mostly frivolous grounds, they seemed to be launching one big NIMBY campaign.
But lately, an increasing number of Massachusetts residents and businesses — without site lines to the project — are turning against Cape Wind as the costs the project will pass on to them through their electric bills become known with greater accuracy.
Massachusetts finds itself in an unenviable quandary where it once claimed national leadership. How can it promote Cape Wind when larger commercial users will see their electric bills increase by thousands of dollars?
No doubt, a project like Cape Wind reduces the stress placed on the environment by traditional methods of electricity production. But it’s becoming more difficult for National Grid, the utility that would distribute Cape Wind-generated power, to tell the press that “there’s an environmental policy being advanced on behalf of all our customers” and not take a hit from the project's higher cost.
An operational Cape Wind turbine farm would mean electricity rates for National Grid’s commercial and industrial customers would increase between 1.9 percent and 2.3 percent.
The Boston Herald reported recently that a small retail business would pay an additional $1,200 per year for power from Cape Wind. A large industrial company would see its bill increase by $114,000.
Out Of Time
National Grid said it expects electricity from Cape Wind to cost 18.7 cents per kilowatt hour in 2013, its first year in operation.
That rate would increase by 3.5 percent annually, according to an agreement between Cape Wind and National Grid.
TransCanada Energy, which owns turbines in Maine, told the Herald that it could sell electricity to National Grid for less than 11 cents per kilowatt hour.
This leads us to believe that the best case is for a balance to be struck between a project that clearly serves a public, social and environmental purpose and the desire of those involved in its development to make a profit.
Clearly, efforts like that undertaken by the Associated Industries of Massachusetts (AIM), which argues that Massachusetts would be better off purchasing cheaper renewable power from a variety of sources rather than “fixating on an expensive boutique project that threatens the economic stability of thousands of Massachusetts employers,” won't win the day.
Cape Wind signed the lease for the site upon which the wind farm will be developed last week. And Cape Wind is but the first in a push by the federal government to use wind power to produce about 100 times what Cape Wind will generate over the next 25 years.
Sound Math
AIM did gain some traction in its push against National Grid’s rate arrangement with Cape Wind when it won intervener status in state Department of Public Utilities hearings and convincingly demonstrated during those hearings that National Grid ignored other alternative energy proposals to deal exclusively with Cape Wind.
However, projecting the cost of energy from all sources even five years from now, forget 10, 15 or 20 years, remains a real crapshoot. Energy price volatility over the last five years has been extreme, and the slow economy has prices at a relatively low level today. Few think oil will stick around at $75 a barrel for long, and while it may take some time to climb back to the $150 range, most believe this limited resource will reach that level and higher once economic conditions improve and worldwide demand is cranking. All this is to say, 18.7 cents per kilowatt hour is not competitive today, but it may look like a pretty good deal down the road.
Customers in the Cape Wind arrangement don’t have much say in the pricing matter, thus their understandable frustration. Cape Wind, through its National Grid agreement, is passing on the cost of development to customers regardless of whether they receive power from the wind farm.
Despite these headwinds, our support of the Cape Wind project to move forward remains unchanged. We still believe it offers an opportunity for Massachusetts to play a leadership role in the nation’s alternative energy future.
This projects role in catalyzing those spin off benefits should provide a real and tangible return. We would encourage the DPU to give the project a thorough review, but discourage efforts to derail it altogether.
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