Edwards Wildman Client Advisory: Massachusetts Utilities Ink Milestone Wind Deal


    Last week three of the Commonwealth’s largest utilities requested the Massachusetts Department of Public Utilities’ approval of long-term contracts to purchase 565 megawatts of wind-generated electricity, in what may be the best sign yet that the price for renewables are becoming increasingly competitive with the price for traditional energy sources. The deal was announced on the same day that Governor Daniel Malloy from Connecticut, revealed that his state’s two largest electric utilities had signed long-term contracts to purchase 250 megawatts from a Maine-based wind farm, and 20 megawatts from a Connecticut-based solar facility.

    The Massachusetts deals include contracts ranging from 15-20 years, and will price the cost customers less than 8 cents per kilowatt hour over the life of the contracts. This marks a significant event in that the U.S. Department of Energy places this price lower than the price for coal (10 cents per kilowatt hour), nuclear (11 cents per kilowatt hour), and solar (14 cents per kilowatt hour). Only natural gas would have a lower price at a cost of slightly less than 7 cents per kilowatt hour. It is estimated that the contracts will generate enough power to supply approximately 170,000 homes, and will save residents served by the three companies as much as a $1 a month.

    The deals are driven by recent changes to the Massachusetts Green Communities Act, which requires the state’s utilities to obtain 15% of their power from renewable resources by 2020. Under the contracts, NStar and Western Massachusetts Electric Company (both affiliates of Northeast Utilities) will receive 53.1 percent of the output, National Grid, 45 percent, and Unitil, 1 percent. As with the Connecticut deals, the companies have asked for expedited review in order to qualify for federal production tax credits which are set to expire at the end of this year.

    If approved, the projects are set to begin commercial operation between 2014 and 2016.

    If you would like further information, please contact the Edwards Wildman lawyer responsible for your matters or one of the authors linked above.

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