Massachusetts utility regulators on Dec. 30 approved contracts between offshore wind developers Commonwealth Wind and Mayflower Wind Energy and power companies, saying the agreements are “in the public interest” – despite Commonwealth’s request to cancel its contracts in the face of rising costs, and a similar warning from Mayflower.
In an order issued Friday the state Department of Public Utilities approved power purchase agreements for both projects, totaling a nameplate power potential of 1,605 megawatts. The agency turned down Commonwealth’s request Dec. 16 to cancel the contract reviews, and allow it to rebid in the next Massachusetts solicitation for offshore power proposals in April 2023.
The order states that Commonwealth and Mayflower procured the power purchase agreements “through an open, fair, and transparent competitive solicitation process…the Department finds that the pricing terms in the PPAs are reasonable for offshore wind energy resources.
“In conclusion, through the use of a fair, open and transparent competitive solicitation process, the Companies have demonstrated that: the pricing terms in the PPAs are reasonable for offshore wind energy generation resources…the Department finds that the estimated bill impacts of the PPAs are reasonable in light of the benefits of the contracts. For these reasons, the Department finds that the PPAs are in the public interest.”
Commonwealth’s parent company Avangrid began pushing in October for reconsideration of the power purchase agreements, saying that global economic conditions – inflation, rapidly increasing material and equipment costs, tightening credit markets and the war in Ukraine – could make the project unfeasible.
In its own Dec. 23 filing with state regulators, Mayflower Wind Energy said it would stick with its commitment to develop 400 megawatts in its first phase of offshore power for Massachusetts for now – but warned it too is under pressure from escalating costs.
Mayflower advised it “is subject to these same facts, pressures and realities” that developers Commonwealth Wind cited in their ongoing bid to begin re-negotiating power purchase agreements.
Mayflower Wind Energy LLC is a 50-50 joint venture between Shell New Energies US LLC and Offshore Wind LLC with contracts to provide capacity up to 400 MW to electric distribution companies. Their federal lease could potentially be developed out to 800 MW capacity.
In its statement, Mayflower said it is continuing to work along the timelines set out in its contracts.
“Notwithstanding the firm commitment expressed above, Mayflower Wind respectfully must nonetheless agree with much of the factual analysis underlying Commonwealth Wind’s conclusion, especially as Mayflower is subject to these same facts, pressures and realities,” the company’s filing states.
“Extraordinary global economic conditions, including unexpected and significant commodity price increases and supply shortages, have materially increased the expected cost of financing and constructing the Mayflower Wind Project,” according to the developers.