Massachusetts regulators have rejected developers’ requests to pause the review of their power purchase agreements for two planned offshore wind projects.
So the companies say they will look for other ways to push forward plans for the 1.2-GW Commonwealth Wind and 405-MW Mayflower Wind projects, which they say are no longer financially viable under the PPAs negotiated with Eversource (NYSE:ES), National Grid (NYSE:NGG) and Unitil (NYSE:UTL).
Avangrid asked the Massachusetts Department of Public Utilities for a one-month suspension of review on Oct. 20. Mayflower followed on Oct. 27. (See Mass. DPU Hears Opposing Views on OSW Finances.)
The DPU denied the requests in an interlocutory order on Nov. 4, saying developers could either move forward with their contractual obligations under the negotiated PPAs or file a request to dismiss the proceedings.
Avangrid spokesperson Craig Gilvarg told RTO Insider Monday that the company “can present a proposal that would return the project to economic viability while still delivering transformational economic investments, significant job creation, and cost-savings to ratepayers, and intends to present that information to the Baker-Polito administration, regulatory officials, the Attorney General’s Office, and the Massachusetts electric distribution companies in the coming days.”
Mayflower told DPU on Nov. 7 that it would move forward with the PPAs but still would seek to resolve the cost issues that led it to request the pause, starting by submitting third-party analysis of the terms.
In its request for a delay, Avangrid said inflation, supply chain constraints and other factors had changed the economics of the project. In a Nov. 1 affidavit to the DPU, Senior VP for Offshore Projects Saygin Oytan said the anticipated cost had increased by hundreds of millions of dollars, giving the project negative value and making it financially unviable.
Mayflower Wind submitted comment supporting Commonwealth’s motion and submitted a similar motion about its own project.
The DPU replied that the PPAs appear to have been negotiated in good faith. Renegotiating them now, at considerable delay, would be tantamount to starting the proceeding over again, the DPU said.
The DPU also faulted Commonwealth on its timing, saying DPU staff spent several months “expending precious resources” to review the proposed PPAs. But Avangrid did not flag these agreements as unviable until Oct. 20, even though their non-viability is based on cost factors that became apparent well before Oct. 20.
DPU noted that Avangrid discussed its concerns with financial analysts Sept. 22.
