Big Mass. Utility Signs Deals, Bypasses Cape Wind

The second-largest utility in Massachusetts has agreed to buy electricity from three wind power companies to help it meet renewable power mandates, but it won't be buying from a high-profile wind farm off the coast of Cape Cod.

On Friday, NStar filed contracts with the Department of Public Utilities to buy power from Hoosac Wind in Massachusetts, Groton Wind in New Hampshire and Blue Sky East in Maine.

Cape Wind, the nation's first offshore wind farm, is still trying to find a buyer for half its power. It agreed last year to a 15-year deal to sell the first half to National Grid starting at 18.7 cents per kilowatt hour, and increasing 3.5 percent annually.

If Cape Wind doesn't sell the rest of its power within the next several months, it may be forced to move ahead with a project smaller than the 130-turbine, 468-megawatt wind farm planned in Nantucket Sound.

NStar is the only other Massachusetts utility large enough to buy a large portion of Cape Wind's power. Its three deals, if approved by state regulators, would eliminate any chance that it would buy all of the power Cape Wind still has on the market, though it could conceivably buy a portion of it.

Gov. Deval Patrick's administration has backed Cape Wind vigorously, but NStar said months ago it had decided to pursue cheaper renewable energy sources.

The three contracts NStar signed, ranging from 10 to 15 years, equal about 109 megawatts of power. The prices NStar has agreed to pay for the power weren't disclosed, and NStar said such pricing is confidential.

"The contracts represent a good value for onshore wind resources for our customers," said NStar spokeswoman Caroline Allen.

Though the numbers weren't disclosed, a 10-year deal NStar has with TransCanada to buy power from a Maine wind farm is a flat 10.5 cents per kilowatt hour.

The three new contracts represent about 1.6 percent of NStar's demand, and the utility is required to secure 3 percent of its electricity demand through long-term contracts with renewable power producers by mid-2014. The company will be trying to secure more deals to meet that requirement in the coming years, Allen said.

The roughly 29-megawatt Hoosac project, in Monroe, Mass., and Florida, Mass., is set to be running by December. The 32-megawatt Blue Sky East wind farm in Eastbrook, Maine, is scheduled to be operating by May 2012, and the 48-megawatt Groton project in Groton, N.H., is scheduled to be operating by November 2012.

The Blue Sky deal is for 15 years, while other two are both for 10. All are fixed-priced deals, meaning the price per kilowatt hour won't increase over time.

In a separate transaction, NStar is also seeking approval for a merger with Northeast Utilities, which would create the largest utility in New England with 3.5 million electric and gas customers in three states.

Recent comments and court filings indicate NStar's decision about Cape Wind could be a factor when the merger goes before Massachusetts regulators.

For instance, in December, just before he left office, the state's former energy chief, Ian Bowles, argued that large utility mergers needed a "new standard of review" that guarantees certain public benefits, including advancing "the development of the commonwealth's solar and offshore wind resources."

Cape Wind, which hopes to begin generating power by 2013, is by far the state's largest offshore wind and renewable power project and been repeatedly touted by officials as a cornerstone of its emerging renewable energy industry.

Allen said the merger with Northeast Utilities is under review and it would be inappropriate to comment on whether its recent contracts could affect it. She did say the merger would be good for the state's renewable energy goals.

"A combined company will be better able to advocate on a national level and a state level for green policies," Allen said.