Utility companies pull out of Cape Wind project - Trade Only Today

Utility companies pull out of Cape Wind project

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Two utility companies terminated their contracts to buy most of the power generated by the proposed Cape Wind wind farm in Nantucket Sound in the latest development in the $2.5 billion project.

National Grid and Northeast Utilities said Cape Wind officials missed a Dec. 31 deadline to secure financing and begin construction, according to a WBUR report. Cape Wind officials called the terminations invalid and said the company is protected by provisions in its contracts.

NStar, a Northeast Utilities subsidiary, informed Cape Wind officials of its decision late Tuesday, officials told the Boston Globe.

“Unfortunately, Cape Wind has missed these critical milestones,” Northeast Utilities spokeswoman Caroline Pretyman told the Globe in an e-mail. “Additionally, Cape Wind has chosen not to exercise their right to post financial security in order to extend the contract deadlines. Therefore, the contract is now terminated.”

In a separate e-mail, National Grid spokesman Jake Navarro told the paper that the utility was “disappointed that Cape Wind has been unable to meet its commitments under the contract, resulting in today’s termination of the power-purchase agreement.”

Under the 2012 agreement, Northeast Utilities and NStar agreed to buy 27.5 percent of Cape Wind’s production. National Grid had signed on to purchase 50 percent.

A Cape Wind spokesman said the developer does not regard the terminations as valid because of provisions that the company said would extend the deadlines.

In letters dated Dec. 31 to both utilities and state regulators, Cape Wind president James Gordon asked that the power companies hold off on voiding the contracts, citing “extended, unprecedented and relentless litigation by the Alliance to Protect Nantucket Sound,” a leading opponent of the project.

Those lawsuits, Gordon said in his letter, had prevented Cape Wind from meeting the milestones laid out in the 2012 contract.

The long-term implications for the project remained unclear late Tuesday. Ian Bowles, who as Gov. Deval Patrick’s first energy and environment chief helped shepherd the offshore project, said Tuesday’s news may have spelled the end for Cape Wind.

“Presumably, this means that the project doesn’t go forward,” he said. The jeopardy in which Cape Wind finds itself reflects a changed energy market, in which developers bear more risk than the eventual ratepayers, Bowles said.

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