Cape Wind power "a bargain," pres. says

boston.bizjournals.com
May 17, 2010

The price for power from the planned Cape Wind turbines in Nantucket Sound would be "a bargain," the president of developer Cape Wind Associates said Monday. In a 90-minute interview with the Boston Business Journal, Jim Gordon strongly defended the project on a number of levels, from economic to environmental to philosophical. The project has faced claims that the project's power would cost more than twice the normal rate of electricity generated from fossil fuels.

Beginning in 2013, National Grid agreed to buy the power at 20.7 cents per kW hour. Gordon noted that this price includes transmission charges, and will remain stable over the life of the 15-year contract - which he said contrasts with the volatility of fossil fuel costs. "I see Cape Wind saving customers money and improving their health, and the environment, and our energy security," he said. "Add all that up, and this is a bargain. It's a real bargain."

Gordon also said that no matter what the project costs to build and maintain, ratepayers will never have to pay more than what's in the contract with utility National Grid. He was responding to claims that potential cost overruns on the 130-turbine project could be passed to ratepayers above the annual 3.5% increase in the National Grid contract. Gordon called the claims baseless, saying that any potential overruns would "accrue to Cape Wind."

The project won final federal approval last month, nine years after it was first proposed. Earlier this month, National Grid signed a contract to buy half of the power output from the 468MW wind farm. The utility projected a monthly bill increase of $1.59 for a typical residential customer in the first year through the deal.

Under the contract, the price of Cape Wind's power will rise 3.5% per year to account for inflation and cost increases for labor as well as operations and maintenance, Gordon said. The contract must be approved by the state Department of Public Utilities. Gordon said the price for Cape Wind's power is certain and stable, unlike the price of energy produced by burning fossil fuels. Oil prices have swung wildly in recent years, and are on their way back up, he noted.

Assuming that prices will keep rising, due to higher demand as the world economy pulls out of the downturn, the price of power from Cape Wind likely won't be considered "premium" for long, he said. Even if that doesn't happen, Gordon contended that Cape Wind is still a bargain when other costs related to burning fossil fuels are considered. Pollution and climate change caused by burning fossil fuels have led to higher costs for healthcare and for insurance to coastal properties, Gordon said. "My mother has a house on Cape Cod, a quarter mile from the ocean, and the insurance companies pulled out because they're afraid of more frequent and more intense hurricanes from climate change," he said.

"People from Brockton and Holyoke are subsidising folks' insurance rates on the Cape." Taxpayers also must help fund the cleanup of fossil fuel-related disasters such as the Gulf oil spill, he noted. "These are costs you don't see on your electric bill, but each and every one of us pays for," Gordon said. Gordon did not put a price on the construction cost for Cape Wind, saying his team is still in negotiations with a contractor for the project. The team of seven senior managers has fully financed the project's nearly $50 million cost so far, Gordon said, though he said most of the funding has come from his pocket.