NStar deal, rise of Cape Wind will boost state’s economy

THE PATRICK administration negotiated diligently and emerged with a fair bargain from the power company NStar, requiring it to purchase electricity from Cape Wind as a condition of state approval of its merger with Northeast Utilities. The deal preserves current electric rates for four years, while moving the nation’s first offshore wind farm a huge step closer to reality.

The $17.5 billion merger still needs to win approval from regulators in Connecticut, where Northeast Utilities is based. But from the standpoint of Massachusetts, the deal now meets the test of serving the public interest.


In exchange for the Commonwealth’s approval of the merger, the combined utility has agreed to buy 27.5 percent of the output from Cape Wind, the 132-turbine wind farm slated for the waters off Nantucket. Another large Bay State power company, National Grid, had already committed to buying half. With more than three-quarters of the wind farm’s electricity now accounted for, the deal should make it possible for Cape Wind to get financing and begin construction.

Opponents complain the deal will force the utility to buy overpriced wind power, whose cost will eventually be passed on to consumers. They also feel it was inappropriate for the Patrick administration to strong-arm the firm, which has long been reluctant to touch Cape Wind.

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But the administration need not lose any sleep for squeezing the companies. With their state-granted local monopolies on electricity, public utilities are not like normal private-sector businesses that have to compete for their market share. It’s perfectly appropriate for state regulators to assert the Commonwealth’s priorities, which include fostering clean energy both for environmental and economic reasons.

Cape Wind power will likely be costlier than that from fossil fuels, and it looks even worse next to today’s historically low natural gas prices. But fossil fuel prices are notoriously volatile; the deal will lock in predictable wind power rates for years.

Furthermore, the deal contains safeguards against steep cost increases for NStar customers. It will freeze electricity and natural gas delivery charges for four years, and also provide a one-time rebate of about $12 to $15 per ratepayer - ensuring that customers see a share of the efficiencies the companies will realize in their merger.


But the true long-term benefit for residents comes in the boost the deal gives to Cape Wind. Offshore power could be an immense economic resource for Massachusetts, and Cape Wind is already shaping up to be the nucleus of what could be a home-grown industry; earlier this month, federal officials began studying the possibility of another large new wind development south of Martha’s Vineyard.

Getting Cape Wind up and running has been a torturous, decade-long undertaking, much of it played out in boardrooms, state houses, and government regulatory agencies. Now it’s time to get started.

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