Contracts for Cape Wind’s power ‘terminated’ 

“Contracts such as the one between us and Cape Wind have these milestones so that projects that are unable to move forward do not burden customers for long periods of time in a high-priced market environment due to lack of supply,” she wrote.

National Grid had agreed to buy 50 percent of the power generated by the project under similar terms to those agreed to by NStar, but confirmed Tuesday that it too had terminated its agreement to buy power from Cape Wind. NStar distributes electricity on Cape Cod and Martha’s Vineyard. National Grid delivers electricity on Nantucket.

“National Grid is disappointed that Cape Wind has been unable to meet its commitments under the contract, resulting in today’s termination of the power purchase agreement,” the utility’s spokesman, Jake Navarro, wrote in an email.

Representatives of both utilities stated they are still committed to renewable energy and will continue to pursue other renewable energy sources.

Cape Wind, first proposed in 2001, does not believe the terminations of its contracts with the utilities are legitimate, according to company spokesman Mark Rodgers.

“We do not regard these terminations as valid due to the force majeure provision of the contracts that extends the milestone dates,” Rodgers wrote in an email.

On Dec. 31, Cape Wind President James Gordon sent letters to NStar and National Grid invoking the force majeure clause in the contracts, citing the ongoing legal challenges it has faced and focusing specifically on the project’s primary opponent, the Alliance to Protect Nantucket Sound.

“Over the past decade, they have filed over 20 administrative and judicial challenges,” Gordon wrote. “Just six months ago, the U.S. Federal District Court recognized the substantial adverse effects of the alliance’s litigation strategy as follows: ‘…numerous courts have reviewed and approved the project and the (power purchase agreement) with NStar and have done so according to and within the confines of the law. There comes a point at which the right to litigate can become a vexatious abuse of the democratic process.’”

Without buyers for its power, Cape Wind’s ability to secure financing needed for the project becomes all but impossible. Cape Wind officials had already conceded that they might have to build the project in phases because of the inability to find a buyer for the remaining power that was not covered by the agreements with NStar and National Grid.

The most recent cost estimate for the project of $2.6 billion was part of filings by the Massachusetts Attorney General’s office in 2010. Cape Wind had since lined up several pieces of the overall financing for the project, totaling about $1.45 billion, including a $150 million Department of Energy loan guarantee.

But opponents of the project have long argued that the cost of Cape Wind’s power, at nearly 20 cents per kilowatt-hour to start, is too expensive and that NStar, in particular, was forced into the contract with Cape Wind by officials in outgoing-Gov. Deval Patrick’s administration.

That argument was made in the U.S. Court of Appeals as recently as this week, when lawyers for the the alliance, the Town of Barnstable and several businesses argued that the intervention by the state was unconstitutional because it superseded the authority of the Federal Energy Regulatory Commission to set wholesale electricity rates.

Opponents also contended the state leveraged approval of a merger between NStar and Northeast Utilities to force the company to buy Cape Wind’s electricity.

“This is very bad news for Cape Wind but very good news for Massachusetts ratepayers,” Audra Parker, president of the alliance, said about the termination of the utility contracts.

Cape Wind could have paid the utilities to extend the contracts but chose not to do so, which Parker said is another indication of just how bad things are for the company.

In response to the question of why Cape Wind didn’t pay to extend the contracts, Rodgers wrote “vexatious litigation,” in an email, adding that “it would be a travesty if delays caused by an interest group funded by one of the Koch brothers could stop a project that would make Massachusetts a leader in offshore wind and create good jobs and help mitigate climate change.”

Without customers for its power, Cape Wind will not be able to secure financing, leaving the project effectively “dead in the water,” Parker said.

“With the changed political landscapes, with lawsuits challenging their lease and with no contracts in hand Cape Wind is in dire straits,” she said.

[Massachusetts Governor Deval] Patrick, who has been a strong supporter of Cape Wind, is set to leave the Statehouse for the last time as governor today. Republican Gov.-elect Charlie Baker, who officially takes office on Thursday, had previously been a staunch opponent of Cape Wind, but later called it a “done deal.”