The decisions of two utilities to pull their financing commitments for the Cape Wind project represent a "near-fatal blow" to the offshore energy project, according to its opponents, although project officials claim the moves by Northeast Utilities and National Grid are invalid.
Gov. Deval Patrick, a longtime proponent of the project, said Wednesday that he learned Tuesday night of the decision by the two utilities to terminate their power purchase agreements.
"We've done everything as a state government to get them over the regulatory lines, and I've said before and say again, after that it's up to the market and up to the leadership of the project and their partners to get it done," Patrick said.
Asked whether the project could survive, Patrick said, "I don't know."
Antis forced perpetual litigation for more than 10 years
"They've had any number of setbacks, the most significant of which has been the perpetual litigation for the past, more than 10 years," he said.
A leading opponent of the project, Alliance to Protect Nantucket Sound President and CEO Audra Parker called for Cape Wind's lease to be revoked and for Nantucket Sound to be named a national marine sanctuary "so that is protected from future development and preserved for its rightful owners - the citizens of the United States."
"The decision by NSTAR and National Grid to end their contracts with Cape Wind is a fatal or near-fatal blow to this expensive and outdated project. While it's very bad news for Cape Wind, it is very good news for ratepayers who will save billions of dollars in electric bills," Parker said in a statement.
Cape Wind officials have been struggling for years to secure necessary permits, overcome legal challenges, and assemble financing for its plan to plant wind turbines in the sound to generate renewable energy.
With backing from Patrick, the project has been tethered to state investments in a New Bedford marine terminal and was once hailed by former Interior Secretary Ken Salazar.
In April 2010, Salazar approved the 130-turbine, 25-square-mile wind farm, calling it "the final decision of the United States of America." At a State House event with Salazar, Patrick said he expected project construction to begin "within a year."
Sen. Benjamin Downing, a Pittsfield Democrat who last session co-chaired the Energy Committee, called the news "disappointing."
"Certainly, we're going to be taking on energy issues this session. I hope to be a part of that debate no matter what position I'm in, but it's certainly something that's going to require us to reassess how the utilities meet their renewable portfolio standard goals and how we jumpstart the off-shore wind industry in Massachusetts and in New England as a whole," Downing said.
Neither Downing nor Sen. Daniel Wolf, who represents Cape Cod and the islands, would say for sure whether they believe the Cape Wind project is dead, but Downing said the loss of financing highlights the need for the federal government to play a more active role in off-shore wind development.
"If we're going to restart it and sort of jumpstart the offshore wind industry I think it's going to have to be regional in nature and it's unclear as to how you do that. So if anything, I think it highlights a real policy problem and not one with a clear answer at this point," Downing said.
National Grid spokesman Jake Navarro expressed disappointment that Cape Wind was "unable to meet its commitments under the contract" leading up to Tuesday's termination of the power purchase agreement.
"We still believe the solution to New England's energy challenge is a diversity of energy sources, which is why we support renewable projects consistent with our goal of reducing emissions while minimizing the cost impact on our customers," Navarro said. "We will continue to pursue other renewable options, including solar, competitively priced on- and off-shore wind, and other technologies as they become available."
Calls anti-wind farm effort a "travesty"
Cape Wind spokesman Mark Rodgers said project officials did not regard the contract terminations as valid due to provisions that he said extend the milestone dates. He added, "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.
"We are determined to supply our power to this supply-constrained region and we will pursue every option available to us."
Touting the project's capacity to address climate change and create jobs, he said it would be a "travesty if delays caused by an interest group funded by one of the Koch brothers could stop" the project.
In Dec. 31 letters to National Grid and Northeast Utilities, Cape Wind President Jim Gordon said that after 14 years of efforts the project "continued to make excellent progress" on financing and siting work.
Gordon attributed Cape Wind's failure to achieve project milestones to "extended, unprecedented and relentless litigation" from the alliance.
Cape Wind "fully expects" to overcome remaining litigation hurdles in 2015, according to Gordon, who requested that the utilities "forbear on any rights it may believe it has to terminate" its contracts.
Associated Industries of Massachusetts, a major business trade group, endorsed the decision of the utilities to terminate their contracts with Cape Wind.
In a statement, AIM Executive Vice President John Regan said the actions "will save customers billions of dollars that would otherwise have been spent buying electricity at the highest power price ever negotiated in Massachusetts."
In its statement, Northeast Utilities said Cape Wind had missed contract deadlines established in 2012 to secure financing and begin construction on Dec. 31, 2014.
"Unfortunately, Cape Wind has missed these critical milestones," the company said in a statement. "Additionally, Cape Wind has chosen not to exercise their right to post financial security in order to extend the contract deadlines. Therefore the contract is now terminated.
"The deadlines Cape Wind has missed were contractually agreed-upon by both companies. 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."
Wolf said he was not surprised by the announcement because he knew the utilities were looking for the project to begin by the end of the year.
While Wolf is a proponent of developing off-shore wind energy, he called the Cape Wind process "flawed."
"To take that kind of open space and allow a private developer without a fully vetted public process has led to 13 years of confusion and not good outcomes," Wolf said. "I've been ambivalent because I like the technology of that project, but I've never been comfortable with the business model or the regulatory oversight. So it's yes on the science and yes on the energy, but I've been uneasy about the land grab and development side."
While Cape Wind's future is cloudy, federal officials are moving ahead with ambitious offshore wind energy leasing.
Four leases for 742,000 acres of sea south of Martha's Vineyard - a area roughly the size of Rhode Island - are scheduled to be put up for bid at a wind power auction on Jan. 29, 2015.
If leased and developed by the power industry, the area has the potential to provide wind-generated electricity to 1.4 million homes, according to the Bureau of Ocean Energy Management, which has touted the auction as part of President Barack Obama's climate action plan and efforts to reduce carbon pollution.
Wolf was more bullish than Downing on the future for off-shore wind in Massachusetts, pointing to efforts by a collaborative on Martha's Vineyard to gain a stake for Massachusetts in the federal deep-sea land auction.
"There is so much opportunity south of the Vineyard down toward Block Island and I really think that's where we need to be focused on developing because that's where the motherload of wind is," Wolf said.