Court backs Cape Wind power deal

The state's highest court has backed utility regulators' approval of the deal that lets National Grid buy power from the proposed Nantucket Sound wind farm.

The power-purchase agreement for half of the project's energy is not unconstitutional, as opponents of the deal had argued, according to a decision released Wednesday by the Massachusetts Supreme Judicial Court.

In a separate but related decision, the court denied a motion by opponents to reopen the record compiled by the state Department of Public Utilities on its review of the pact.

Cape Wind officials hailed the decisions as yet another in a growing number of legal victories for the project. Opponents of the controversial project, however, called the court's findings inconsequential in light of pending federal lawsuits and financial challenges that still confront the wind farm.

As Cape Wind moves forward, New Bedford is positioning itself to get a slice of the business and take advantage of the offshore wind industry in general. Cape Wind plans to be the first to use New Bedford's proposed port staging facility to deploy turbine parts, provided that work is done in time. Mayor Scott W. Lang is optimistic the city's staging area would be ready before the wind farm begins construction.

The DPU approved Cape Wind's power purchase agreement in November 2010.

The agreement is not a violation of the federal commerce clause, or unconstitutional, because the state lifted a provision in the Green Communities Act that limited National Grid to buying power from renewable energy sources within the state, according to the court's decision.

"Based on the record, the department ultimately found that National Grid demonstrated that it had complied with the new, nongeographically limited statute and regulations in its negotiations with Cape Wind," Justice Margot Botsford wrote in the 34-page decision.

Cape Wind's primary opponent, the Alliance to Protect Nantucket Sound, and the other plaintiffs, also argued the DPU was wrong in finding the agreement cost effective. They believe the contract should have been solicited through competitive bidding.

National Grid agreed under the deal with Cape Wind to pay about 19 cents per kilowatt hour for power from the 130-turbine project in the first year of the contract. The cost of the 15-year contract is set to increase 3.5 percent annually. In addition, National Grid is allowed to collect 4 percent of the contract's value each year.

The utility estimates that its average residential electricity customer will pay an extra $1.50 per month for Cape Wind's power although opponents of the project argue the cost will be greater for businesses that use more electricity. National Grid delivers electricity on Nantucket but not on Cape Cod or Martha's Vineyard.

In outlining the court's rationale that the DPU acted appropriately in approving the contract, Botsford wrote that under the Green Communities Act, cost effectiveness does not simply mean least cost.

"Rather, an analysis of cost effectiveness must consider 'all costs and benefits associated with (the power purchase agreement), including the non-price benefits that are difficult to quantify, and including costs and benefits of complying with existing and reasonably anticipated future federal and state environmental requirements,'" Botsford wrote.

In its second opinion released Wednesday, the court found that the DPU was entitled to deny a motion by the alliance to reopen the record of the department's review of the agreement so that the file would include information about contracts between NStar and other renewable energy developers.

"Today is a really big day for Cape Wind but it's an even bigger day for clean energy in Massachusetts," Cape Wind President Jim Gordon said during a teleconference Wednesday afternoon.

Cape Wind fully expects to sell its remaining power and secure financing for the project, Gordon said. The company hopes to be producing energy from the turbines within a year, he said.

Gordon declined to comment on discussions regarding the sale of the remaining power to NStar, which delivers electricity on Cape Cod.

Cape Wind has argued that NStar should be required to buy the second half of its power as part of a pending $17.5 billion merger of the utility and Northeast Utilities. Cape Wind's opponents claim the state is putting pressure on NStar to buy the power as part of its review of the merger.

"We sign confidentiality agreements revolving around the negotiations we do with the utilities," Gordon said.

Cape Wind's opponents downplayed the court decisions, arguing the project's chances of being built are waning.

"Ultimately the decision doesn't change the fact that Cape Wind is facing insurmountable legal and financial challenges," alliance President and CEO Audra Parker said Wednesday. "This is essentially a contract for a project that can't be built."

In particular, Parker said, the project's prospects were diminished earlier this year when the Department of Energy withdrew a loan guarantee for Cape Wind and after a federal appeals court found the Federal Aviation Administration had erred in approving the wind farm.

The FAA ruling that Cape Wind would not be a hazard to air travel was not struck down but rather remanded to the agency for further explanation, Gordon countered.

Although the alliance and the town of Barnstable recently scored a victory in the case challenging the FAA approval, Cape Wind has won more than a dozen other lawsuits connected to the project, including a previous ruling in the project's favor by the Supreme Judicial Court.

Several federal lawsuits challenging the U.S. Department of Interior's approval of the project are pending in federal court. Those cases are expected to begin in earnest in the spring, Gordon said.

The FAA is currently reviewing the project's potential hazard to navigation in light of the federal appeals court decision, according to an FAA spokeswoman. "

The (Supreme Judicial Court) decision is fairly moot given all the other challenges," Parker said.

The alliance continues to maintain that the Cape Wind-National Grid agreement is a violation of the commerce clause, she said.