NStar feels the heat 

National Grid has agreed to buy half the power from Cape Wind at an initial cost of 19 cents per kilowatt, adding about $1.50 per month to the bill for the average residential customer. But opponents argue the price of the power will cost businesses much more than that, a premium that will be passed on to their customers. The cost of the 15-year pact will increase annually by 3.5 percent and includes an incentive for the utility equal to 4 percent of the contract’s annual value.

The brief filed Wednesday calls for the DPU to include conditions in any approval of the merger that require the companies “to demonstrate concrete, verifiable and enforceable reductions in their reasonably foreseeable climate impact.”

The conditions called for in the filing require NStar to enter into a 15-year contract for new wind energy equal to 2 percent of the utility’s electric load as of a year ago, or about 130 megawatts. Cape Wind’s so-called “name plate capacity” is 468 megawatts with an average production of 170 megawatts.

“It is not clear what the order will say when (the DPU) approves it,” May said during an interview with the Times in the aftermath of Tropical Storm Irene about his expectation that the merger would win approval.

Cape Wind’s opponents have argued that NStar has been able to contract with land-based wind energy projects that offer far less expensive power than Cape Wind. Cape Wind and its supporters contend that the project is necessary to spur the nascent offshore wind energy industry and to fulfill the state’s renewable energy goals.

In addition to the requirements related to wind energy, state energy officials proposed conditions on the merger that include increased energy efficiency savings, the inclusion of 10 megawatts of solar energy projects in the utility’s portfolio over the next decade, the introduction of an electric vehicle pilot program and that NStar adopt so-called “decoupled” rates that encourage greater energy efficiency.

The state energy officials also called for a three- to five-year rate freeze as a condition of the merger.

Attorney General Martha Coakley filed a separate brief Wednesday recommending the DPU impose a five-year rate freeze for NStar gas and electric customers as a condition of the merger.

“The merger of these two public utility companies has the potential to lower costs for customers through increased operating efficiency, but ratepayers need to see the results of those savings in their bills,” Coakley said in a prepared statement. “These merger conditions are necessary to ensure that the companies’ shareholders don’t simply pocket the increased profits and guarantee that any benefits of the merger flow back to customers.”

There is a clear pattern of the state pressuring NStar to buy Cape Wind’s power, said Audra Parker, president and CEO of the anti-Cape Wind group the Alliance to Protect Nantucket Sound.

“The state shouldn’t be picking winners and losers,” she said, adding that to do so is irresponsible, especially in light of recent financial scandals involving solar power companies backed by the state and federal government.

The 2008 Green Communities Act, which the state is relying on to measure the NStar Northeast Utilities merger, is flawed, Parker said, adding that legislation has been filed to require competitive bidding for renewable energy purchased by utilities.

There were 11 briefs filed on the merger with the DPU Wednesday and NStar is currently reviewing them, the utility’s spokeswoman Caroline Allen wrote in a statement emailed to the Times. A reply brief from the company will be filed Oct. 12, according to Allen.

The next hearing on the merger is scheduled for Nov. 3, according to the DPU’s website.

Cape Wind is still reviewing the various briefs filed in the DPU merger case, company spokesman Mark Rodgers said.

In a filing submitted to the DPU Wednesday Cape Wind officials specifically request that the agency require NStar to buy the remainder of the company’s power as a condition of the merger with Northeast Utilities.

Cape Wind has been in ongoing discussions with potential buyers for the remainder of its power, Rodgers said, adding that he could not identify them because of confidentiality agreements.