Quotes: “The lease, which is another major step toward construction of America’s first offshore wind farm, calls for an annual fee of $88,278 until the project is up and running. The lease fee jumps to 2 percent of operating revenues for the first 15 years and then to 7 percent in later years. The first year’s fee would generate about $2 million.”
Quote: “By comparison, royalty fees for offshore oil and natural gas facilities run from 12.5 percent to 18.75 percent.”
Quote: “Opponents of Cape Wind said the fight isn’t over, pointing to a number of environmental lawsuits that have already been filed against the project.”
Feds award Cape Wind a sweet 28-year lease deal
By Jay Fitzgerald | Thursday, October 7, 2010 | http://www.bostonherald.com
| Business & Markets
Cape Wind’s new long-term lease of federal waters in Nantucket Sound calls for super-low royalty fees designed to spur development of offshore wind power in America.
U.S. Interior Secretary Ken Salazar, who earlier this year gave a tentative thumbs up for the 130-turbine wind farm, announced yesterday that the feds and Cape Wind Associates have signed a 28-year lease for 25 square miles of federal waters off Cape Cod and the Islands.
The lease, which is another major step toward construction of America’s first offshore wind farm, calls for an annual fee of $88,278 until the project is up and running. The lease fee jumps to 2 percent of operating revenues for the first 15 years and then to 7 percent in later years. The first year’s fee would generate about $2 million.
By comparison, royalty fees for offshore oil and natural gas facilities run from 12.5 percent to 18.75 percent.
But supporters of Cape Wind noted yesterday that offshore oil and gas royalty fees are “riddled with loopholes” that sometimes allow energy companies to pay very little, if anything, in fees when drilling offshore.
Sue Reid, a senior attorney for the Conservation Law Foundation, said comparing Cape Wind’s operating fees to the book fees of oil platforms is an “apples to oranges” comparison. Oil companies extract a finite amount of actual fossil fuels when they drill, while wind farms merely use an inexhaustable supply of wind, she said.
But Cape Wind’s stipulated low fees are nevertheless yet another example of the government assisting development of wind power and other renewable-energy technologies. Cape Wind is also expected to be reimbursed about $600 million, via tax credits, after expected construction of the $2 billion wind farm.
Salazar’s lease announcement was a clear victory for Cape Wind, which is now awaiting a decision by state regulators about its proposed multibillion-dollar deal to sell half of its electricity to National Grid.
“This crucial milestone opens a new chapter of clean electricity production and a new source of jobs for our nation,” said Jim Gordon, president of Cape Wind Asssociates.
Opponents of Cape Wind said the fight isn’t over, pointing to a number of environmental lawsuits that have already been filed against the project.
Article URL: http://www.bostonherald.com/business/ge ... id=1287162
Most National Grid customers are far from Cape Wind site
Electric costs head west
By Jay Fitzgerald | Monday, October 11, 2010 | http://www.bostonherald.com
| Business & Markets
Some of Cape Wind’s biggest critics ironically won’t have to foot the bill for the $2 billion wind farm in Nantucket Sound.
In an odd twist to the decade-long fight over the controversial offshore energy project, those farthest away from the planned wind farm will often have to pay its higher electric bills - while many of the most vocal opponents closest to the project will get a financial pass.
The reason: National Grid, which has signed a multibillion-dollar power deal to buy half of Cape Wind’s future electricity, doesn’t cover Cape Cod and Martha’s Vineyard.
National Grid’s main coverage areas for its 1.2 million customers lie in western and central Massachusetts, the North Shore and parts of the South Shore well north of the Cape Cod Canal.
The only part of the Cape and the Islands that’s covered by National Grid is Nantucket.
Nstar, the state’s second-largest utility, covers the mainland Cape and Vineyard, as well as many parts of the South Shore and Greater Boston.
And Nstar has signaled it has no intention of buying electricity from Cape Wind, whose initial prices could be twice as high as the current cost of electricity from other sources.
“It’s a bizarre situation,” said Robert Rio, senior vice president of Associated Industries of Massachusetts. “People out there in the western areas (of Massachusetts) aren’t really aware they’ll be impacted.”
Actually, they’re slowly becoming aware - and they’re split over the burden that will fall on them to pay for Cape Wind’s power.
“There is a real concern out here,” said David McKeehan, president of the North Central Massachusetts Chamber of Commerce and head of the North Central Massachusetts Economic Development Council. “This is going to be an added cost of doing business for many of our members.”
National Grid’s Cape Wind contract, which is now being reviewed by state regulators, could add thousands of dollars a month to a manufacturer’s electric bill, based on National Grid’s own rate estimates.
“About 1 out of 4 people out here work in some way in manufacturing,” said McKeehan, whose groups represent National Grid customers in Leominster, Ayer, Clinton, Pepperell and five other central Massachusetts communities.
But not all businesses are upset.
Tom Clay, chief executive of Xtalic Corp. in Marlboro, said some business owners accept Cape Wind’s higher costs as the price the state has to pay for cleaner and more reliable energy.
“I’m of the opinion we have to lean green” said Clay, whose electronic-materials firm is a National Grid customer.
McKeehan and Clay agree on one thing: It hasn’t quite sunk in yet with many National Grid customers in central and western Massachusetts that they’ll be paying for Cape Wind.
“The awareness is low,” said Clay. “It’s comes across as a Cape Cod issue, but it’s not.”
Article URL: http://www.bostonherald.com/business/ge ... id=1288004