ONE OF THE ORIGINAL ARCHITECTS of the declining price cap on offshore wind solicitations is now calling on the Baker administration to scale it back.
Robert Rio, senior vice president and counsel at Associated Industries of Massachusetts, one of the state’s leading business groups, sent a letter to the Baker administration on July 5 urging modification of the price cap, which requires each successive offshore wind procurement to be priced lower than the last.
The unusually low bid on the original contract won by Vineyard Wind and the possibility that a federal tax credit might disappear make the price cap problematic for future procurements, Rio said.
“AIM does not want higher prices for electricity, but these issues were not recognized in discussions during drafting of the 2016 law,” Rio said in his letter, referring to the law that authorized offshore wind procurements and included the declining price cap. “Outdated laws should not inhibit our goals – in some cases they need to change as more information becomes available.
Rio said AIM supported the declining price cap when it was included in a 2016 law because there was concern the price of offshore wind would be high and the winner of the original solicitation “would have a lock on future solicitations.” But Rio said competition during the first solicitation was strong and the winner, Vineyard Wind, submitted a price that was lower than anyone had envisioned.
Now, with a second offshore wind procurement underway, Rio said in his letter that he is worried bidders may be scarce or possibly nonexistent because of the pressure to come in at an even lower price. He noted the federal investment tax credit, which enabled the low bid by Vineyard Wind, is scheduled to be phased out and may not be fully available to the next bidders.
The politics of the declining price cap is interesting. Officials along the South Coast, the area of the state trying to capitalize on the emergence of an offshore wind industry, believe retaining the price cap will make it difficult for developers to include in their bids investments in an onshore supply chain.
During this year’s budget debate, Rep. Patricia Haddad of Somerset pushed an amendment to do away with the price cap entirely. She subsequently amended her amendment to retain the price cap but allow it to be adjusted for tax credits, inflation, incentives, and investments that would promote employment and economic development onshore. That amendment, creating a far more flexible price cap, was approved by the House.
The Senate, in its budget proposal, included no provision on the declining price cap. With the two branches at odds, a conference committee of the two branches is trying to decide what position to take.
The Baker administration’s stance has been hard to read, but generally the governor has supported the price cap. Patrick Woodcock, the Baker administration’s secretary of energy, did not return phone calls on Thursday, but it seems obvious that Rio’s letter to him was an attempt to change the administration’s mindset.
Nearly three-quarters of the Senate penned a letter Thursday urging the Department of Environmental Protection commissioner to rescind approval for a controversial natural gas compressor station in Weymouth, a significant escalation from what had been mostly staunch local opposition.
The two-and-a-half page letter, signed with bipartisan support by 29 of the Senate’s 40 members, asks DEP Commissioner Martin Suuberg to reject the proposal. It was released one day before his final decision on whether to uphold an air quality permit under appeal is due.
Warning that “public trust is lost” after the lengthy permitting process that saw outcry from environmental and health experts, the senators said the compressor plans sought by Algonquin Gas Transmission are a threat “to the Commonwealth as a whole” and could set a “dangerous precedent” for siting such facilities.
“The administrative proceedings surrounding the Weymouth compressor station application are fraught with errors, inaccuracies, and obstructions,” senators wrote. “Because of this, combined with the overall environmental and public health implications of the project, we believe that the DEP should rescind all permits pertaining to Algonquin’s application predicated upon the many permitting appeals filed by citizen groups and affected municipalities, and reevaluate the proposal in light of the facts and in a publicly transparent fashion.”
“As a Commonwealth, we should all be in approval before moving forward with something as precedent-setting as this,” they continued.
Four of Weymouth Sen. Patrick O’Connor’s five Republican colleagues — all except Sen. Ryan Fattman of Sutton — signed the letter, as did Sen. Anne Gobi, who chairs the Joint Committee on Environment, Natural Resources and Agriculture, and Sen. Joanne Comerford, who co-chairs the Public Health Committee.
Michael Barrett, the Senate chair of the Joint Committee on Telecommunications, Utilities and Energy, did not sign the letter, nor did Senate President Karen Spilka.
Senate leadership split on supporting the effort. Spilka, President Pro Tempore William Brownsberger and Assistant Majority Leader Joan Lovely did not sign, while Majority Leader Cynthia Creem, Senate President Emerita Harriette Chandler and Assistant Majority Leader Sal DiDomenico did.
The project has drawn strong local opposition since being proposed. The site that Enbridge selected lies right on the water in a densely populated area, with 930 homes within a half-mile radius — some of which are protected environmental justice communities — and both a school and a heavily traveled bridge nearby.
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