Policy Documents

Coakley Approves Cape Wind Project, Consumers Stuck with the Bill

Bonner R. Cohen –
August 12, 2010

In the latest twist in a long battle over a proposed wind farm off the coast of Massachusetts, state Attorney General Martha Coakley has recommended that state officials approve utility company National Grid’s proposal to buy electricity from the controversial Cape Wind offshore industrial wind farm.

Coakley had filed an official request with the state Department of Public Utilities July 6, asking the agency to order Cape Wind LLC to disclose cost and profit estimates for wind farm project within three days. Coakley had publicly expressed concern that electricity generated by Cape Wind was much more expensive than the electricity from conventional sources it would replace. Coakley explained in a written statement, “Neither party had an incentive to bargain for terms that yield cost-effective terms for ratepayers.”

Extremely Costly Power
Cape Wind refused to provide its cost and profit estimates, but negotiated an agreement with Coakley to charge 18.7 cents per kilowatt hour, rather than its proposed 20.7 cents per kilowatt hour, for the electricity it generates when it goes online in 2013. Cape Wind then raise its prices by 3.5 percent each year.

Robert Rio, senior vice president for the Associated Industries of Massachusetts, says the revised deal still threatens the state’s economy.

“We still have serious concerns with the process and with the cost of this project,” Rio told the Boston Globe.

Cape Wind and National Grid do not dispute that wind power generated by Cape Wind, even under the revised agreement, will be dramatically more expensive than current electricity. However, they say the higher prices will not cause overall consumer electricity prices in the state to rise dramatically, because the proposed wind farm will supply only a small percentage of the electricity the utility sells.

But if the amount of electricity produced by Cape Wind will be so small, critics ask, then why go through with the controversial offshore wind farm?

Coakley Adds New Hurdle
Cape Wind has been running the federal and state regulatory gantlet since the project was unveiled in 2001. The Obama administration, a big supporter of renewable energy, approved the project on May 17 of this year.

Once completed, the giant wind farm would cover 24 square miles and be located between 3 and 11 miles offshore. It would contain 130 horizontal-axis wind turbines, each having a hub height of 285 feet. It would produce an average of 170 megawatts of renewable electricity, enough to power nearby Cape Cod, Martha’s Vineyard, and Nantucket Island.

Environmentalists’ Opposition Solidifies
Touted by its supporters as clean energy that doesn’t emit greenhouse gases, the project has had its share of critics environmentalists. Sen. John Kerry (D) and the late Sen. Edward M. Kennedy opposed Cape Wind, arguing, among other things, that the giant waterborne turbines would deface the area’s picturesque coastline and threaten local seabirds. Robert F. Kennedy, Jr., an enthusiastic backer of wind power, likewise opposes the project.

“It’s a boondoggle of the worst kind,” said Kennedy in interview with FoxNews.com. “It’s going to cost the people of Massachusetts $4 billion over the next 20 years in extra costs.”

Kennedy claims his opposition to the Cape Wind project has nothing to do with its location within view of the multimillion-dollar Kennedy estate. His opposition, he claims, is purely economic.

“We’re the windiest country on earth, and we have lots and lots of land” on which to build wind farms, said Kennedy. “Americans don’t want to pay 27 cents a kilowatt hour for energy.”

Consumers Stuck with Bill
Other critics point out heavily subsidized wind power is neither reliable nor cost-effective.

“Leaving aside the environmental havoc wreaked by wind turbines, there is no question that ratepayers will pay through the nose for this costly boondoggle,” said Sterling Burnett, Ph. D., a senior fellow with the National Center for Policy Analysis.

“Wind power, even with generous subsidies, in most markets is already more expensive than competing power sources. Building turbines offshore only adds to the expense and, subject to the vagaries of seasonal weather, could add to the unreliability,” Burnett explained.

Bonner R. Cohen, Ph. D. (bcohen@nationalcenter.org) is a senior fellow with the National Center for Public Policy Research.