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Cape Wind buoyed as SJC allows utility deal

The state’s highest court gave the green light yesterday to a controversial offshore wind farm’s agreement to sell half its energy to a utility, and the president of the Cape Wind project said he hoped construction could begin in about a year.

“Today is a really big day for Cape Wind, but it’s an even bigger day for clean energy in Massachusetts,’’ said Jim Gordon, whose company plans to build 130 wind turbines in Nantucket Sound. “This moves the project forward.’’

The Massachusetts Supreme Judicial Court decision to uphold a power-purchase deal between Cape Wind and National Grid assures a market for Cape Wind’s power for its first 15 years of operation. That purchase deal had been approved by the state Department of Public Utilities in November 2010, but was challenged by four groups, including the nonprofit Alliance to Protect Nantucket Sound. Among the contentions: that the utility improperly had limited its search for renewable energy sources within Massachusetts and that the deal was neither cost-effective nor in the public interest.

But in a 34-page ruling written by Justice Margot Botsford, the high court unanimously rejected every argument advanced by critics. Botsford called the DPU review of the agreement between Cape Wind and National Grid thorough and considered and upheld the department’s decision.


Bob Grace, an energy consultant at Sustainable Energy Advantage, a Framingham energy consulting firm not involved in the project, said that while the court’s decision was critical for Cape Wind, it does not ensure the project will be built.

“I think this was maybe the alliance’s best hope at derailing the project, or their next best hope,’’ Grace said. “From Cape Wind’s perspective, this is necessary but not sufficient to move forward. They need to still find buyers for the rest of their [energy] output,’’ which will help the company secure investors to finance the project.


Opponents of the project were undeterred. Audra Parker, president of the Alliance to Protect Nantucket Sound, said the decision was disappointing but the organization was not giving up.

“We will continue to fight Cape Wind until it’s totally defeated,’’ Parker said.

The DPU’s 2010 approval of the contract between Cape Wind and National Grid was a milestone in the project’s ability to raise the money needed to start construction. Under the deal, National Grid agreed to buy half the power generated by the wind farm over 15 years, at a starting price of 18.7 cents per kilowatt-hour that would increase by 3.5 percent each year.

That decision was appealed by the alliance and three other groups, including the state’s largest employer group, the Associated Industries of Massachusetts; a trade group of electricity producers, the New England PowerGenerators Association; and an energy company, TransCanadaPower Marketing.

Critics said the DPU was wrong to let National Grid limit its search for renewable energy sources to Massachusetts and not to put the contract out through a competitive bidding process.

At the time the deal was reached, state law required utilities to increase the amount of renewable energy they used and to buy renewable power generated within the state or neighboring waters. The provision requiring utilities to favor in-state energy sources was later thrown out.

Limiting the search to the state made Cape Wind a more attractive supplier to the detriment of ratepayers, critics said.


But the SJC said yesterday that “our independent review of the department’s ultimate findings leads us to conclude that National Grid entered into [the contract with Cape Wind] for reasons unrelated to the geographic limitation provision.’’

The SJC also endorsed plans by National Grid to pass on the additional costs, which have been estimated to be modest, less than $2 a month for residential customers. The decision to pass on higher energy prices was unsatisfactory to one of the opponents, the Associated Industries of Massachusetts.

“We continue to maintain that state regulators fell short of their responsibilities to consumers by approving this agreement at a time when other utilities were finding plentiful renewable electricity at less than half the cost of Cape Wind,’’ Richard C. Lord, president of the group, said.

Sue Reid, a senior attorney with the Conservation Law Foundation, a New England environmental advocacy organization that supports the wind farm, said the decision affirmed that the benefits of the contract outweighed the costs. Those benefits, she said, include the proximity of the wind farm to electricity demand, compared with more distant projects, and the fact that over time, the project will help reduce the overall wholesale costs of energy in the state.

Not all obstacles have been resolved. Next year, a Washington, D.C., district court is expected to hear a suit that involves multiple parties that oppose the project. The project’s developers are also seeking a determination from the Federal Aviation Administration that their project poses no hazard to flights and navigation, after a federal court in October rejected a previous ruling ecause of insufficient analysis.


The state’s secretary of energy and environmental affairs, Richard K. Sullivan Jr. praised the ruling.

“The DPU’s original ruling assured that ratepayers could get renewable power at a fair price, and today the SJC confirmed that decision-making process,’’ Sullivan said. “Cape Wind will create local jobs, reduce our dependence on foreign sources of energy, and is poised to kick-start a new US industry by making Massachusetts the site of the country’s first offshore wind farm.’’

Carolyn Y. Johnson can be reached at cjohnson@globe.com. John R. Ellement can be reached at ellement@globe.com.