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Updated on August 17, 2010

Cape Wind's Continuing Deception

Massachusetts Attorney General Martha Coakely has now made a thorough mess of the Cape Wind situation. However, she has had the assistance of the press, principally the Boston Globe. Not having any personal knowledge of Coakley I have no reason to think she is anything other than well meaning. However, having watched and listened as she trashed the ethics of her office while seeming to believe she was doing a good thing for the environment and for Massachusetts electric rate payers, I cannot conclude anything but that she is being driven to her current position by forces she does not understand.

On Friday, July 30 Attorney General Coakley announced that she had hammered out a deal between Cape Wind Associates and National Grid, in close cooperation with the Massachusetts Department of Public Utilities, to lower the price of the proposed power purchase agreement (PPA) between Cape Wind and National Grid by 10%. The original price had been announced at 20.7 cents per kilowatt and the newly minted agreement is for 18.7 cents. 18.7 cents is still more than double the current low rate of 8 cents available for customers who use electricity from the conventional mix and the new agreement, like the old, allows this price to rise by 3.5% (compounded) annually. Each year a further 4% will be added as a concession to some fictitious costs claimed by the transmission companies. In other words, within two years the price per killowatt will exceed the original 20.7 cents.

Before getting into the issue of press dishonesty, a brief look at the politics behind AG Coakley's actions is in order. Politically, the fix has been in for Cape Wind to be approved and built for nearly a decade. A stunning development was seen in December of 2009 when Coakley, then a candidate for the U.S. Senate seat vacated by the deceased Ted Kennedy, publicly endorsed Cape Wind. Some, I am one, would view this as a serious conflict of interest for the sitting Attorney General because it is her constitutional responsibility to represent the interests of Massachusetts citizens. This advocacy extends to matters of consumer protection and in fact it is the responsibility of the Attorney General to review and either approve or reject contracts approved by the Department of Public Utilities. As we all know Coakely lost to Scott Brown and is therefore still Massachusetts Attorney General. How can she fairly advocate for citizens' interests regarding increased utility costs in a case where she has already issued a blanket approval of the energy project that will deliver the admitted cost increase? Coakley approved Cape Wind in public statements as a way to win votes before she even knew what the cost of its electricity would be.

The Massachusetts Attorney General, whether Ms. Coakley or any other Attorney General, is not empowered to set rates or negotiate utility contracts. By intervening at this stage of the process Martha Coakley has clearly become an advocate for Cape Wind. She has demonstrated beyond any doubt that she is determined to see Cape Wind built and that as a matter of public policy she sees the project as offering more benefits than problems. This is not her role. Massachusetts law requires that utility contracts be "cost effective." It is this, the cost effectiveness of utility contracts, that Coakley is supposed to be enforcing, not some vague so-called pro environmental platform which ultimately favors no one except the project developer.

Speaking of cost effective, there is no clear definition in law or rule or precedent telling us exactly what those two words mean. What is cost effective? Is electricity at more than twice the prevailing price cost effective? If so, why? How does a substantially higher electric bill figure out to be cost effective for the consumer? Perhaps this term refers instead to the developer and his costs and profits, perhaps. The Cape Wind deal with National Grid is certainly cost effective for Jim Gordon, Cape Wind's developer, because he believes it assures him the ability to acquire project financing and therefore he will make a vast amount of money on the deal. But, is whatever helps the developer truly cost effective in terms of the citizens of the Commonwealth whom Coakley has sworn to protect?

Massachusetts needs to define cost effective as it relates to the utility rates its Department of Public Utilities approves and passes along to retail customers of natural gas, electricity and telephone and cable television services. Approving the deal National Grid and Cape Wind have crafted could set a very bad precedent for all future utility contracts and rates. Cape Wind's continuing deception must not become the benchmark for future utility contracts. How can it not be clear to Coakley that Cape Wind has consistently lied about how much their electricity would cost?

The history of Cape Wind claims is brief and chilling:

1. Original claim (2002-2003): Cape Wind will generate an annual savings of $25 million across the six state New England region. Although a small savings, it is a start.

2. Subsequent claim ( spoken by Jim Gordon personally in Yarmouth in 2003): Cape Wind might be slightly more expensive than other power but it will "exert a downward pressure on New England Electric rates."

3. The first claim becomes cast in stone when it is repeated by the Massachusetts energy facilities Siting board (EFSB) in the body of their report approving Cape Wind's undersea transmission cables. Although the $25 million figure was developed by LaCapra Associates, a consulting firm hired by Gordon, and then given to EFSB in the LaCapra report Gordon will subsequently claim that it was developed by EFSB. In fact, EFSB was given this figure by LaCapra. Gordon is once again altering reality to suit his purposes.

4. 2003 - 2009: Gordon and EFSB stick with their original claim.

5. 2008: the U.S. Minerals Management Service (MMS) issues its Draft Environmental Impact Study (DEIS) on the Cape Wind project. In appendix F MMS presents its economic analysis and says that Cape Wind's power will cost at least 12 cents/KW, substantially more than other power. MMS refuses to publish its complete analysis, saying that to do so "might tend to confuse people." In fact, industry experts place the cost of Cape Wind's power at more than 20 cents/KW.

6. Charles River Associates, a self described prestigious global consulting firm, under contract to Cape Wind Associates, issue a report declaring that Cape Wind will save Massachusetts electric rate payers $4.6 billion over 25 years ($185 million/year). Neither Charles River Associates nor Cape Wind have yet explained the discrepancy between this claim and the facts of the proposed power purchase agreement. The Charles River Associates claim was published in early 2010.

7. Cape Wind and National Grid produce a draft power Purchase Agreement (PPA) calling for a first year price of 20.7 cents/KW (rising by 3.5% compounded annually plus a simple annual green energy premium of an additional 4%). This price is more than double prevailing electric rates and is offered by Gordon as the absolute least for which he can sell his power and still have a viable project. All this has happened in 2010.

8. Massachusetts Attorney General Martha Coakley becomes personally involved and hammers out a compromise between National Grid/Cape Wind and the Massachusetts Department of Public Utilities. The new, lowest possible price, is 18.7 cents/KW, a 10% reduction from the original draft PPA. The new PPA is announced in late July of 2010.

9. Coakley asks Gordon to provide information about project costs, operating costs of the completed wind farm, his profits, etc. Gordon refuses and Coakley proceeds in her negotiations for a PPA without the information she apparently thought she needed and should have.

Coakley's PPA also opens new issues such as will Cape Wind be built all at once or in stages? When will it begin generating power, 2010 or as late as 2016? And on and on. It should be remembered that the Coakley PPA deals with only half of Cape Wind's projected capacity. What will happen to the other half remains unknown and probably uncertain. When Gordon refused to comply with Coakley's request for information, why did not the attorney general simply stop all work on developing an acceptable PPA? She blinked.

Ask yourself why the Boston Globe has never published this time line of Gordon's cost claims. It pays to know who your friends are. Here is a quote from the Globe, July 30, 2010, in an article written by Beth Daley, this comment is made about the Alliance to Protect Nantucket Sound, Cape Wind's principle adversary to date: "The group is largely concerned about the aesthetics of the wind farm..." Ms. Daley is simply wrong. Is she unconsciously misrepresenting the views of those who oppose Cape Wind because the immediate response for many back in 2001 was to believe Jim Gordon? In either case she clearly deflects attention from the issue of cost and the simple, undeniable fact that Jim Gordon has not been telling the truth about his project's effect on retail electric rates since 2001. It is not important what the Alliance's motives were, and they always opposed Cape Wind on the issue of its cost of energy: It is the now admitted costs that are the issue. People should be angry at this odd use of the press and should let the Boston Globe known they are angry.

A word about Ms. Daley - I have spoken with Beth Daley on different occasions and have always found her to be intelligent, informed and at least giving the appearance of fairness. I have no way of knowing, although I have suspicions, what the pressures on Globe staff are as they come from management. However, there is a tendency in the press, not just with Beth Daley or even just with the Boston Globe, is to greet such ambitious proposals as Cape Wind as good and true per se. And, at close range Jim Gordon is very charming, a superb salesman. None of that excuses the general error made by the press at large.

The Boston Globe is owned by the New York Times Company. So, when the New York Times wants to know about Cape Wind their people simply consult the Globe. They do not call the Alliance to Protect Nantucket Sound; they just call the Globe because surely the Boston Globe knows all. The Washington Post and the Wall Street Journal then write from positions of absolute certainty because they have read Globe and Times accounts of the matter. Then he Chicago Tribune and the Denver Post and the Los Angeles Times fall into line and before we know it the entire list of major national newspapers declare that support for Cape Wind is the only right choice...and they should know....because they know all about Cape Wind...they read it in the Globe.

Thank you Boston Globe.

Here are the facts as I know them, and I am very close to a number of people who work at and with the Alliance to Protect Nantucket Sound. I have attended dozens of public meetings about Cape Wind, have submitted comments to various agencies in this matter, have written extensively about it and know from personal experience what the Alliance has done by way of opposing and researching Cape Wind. The Alliance To Protect Nantucket Sound has spent a few million dollars opposing Cape Wind. Many hundreds of thousands of these dollars were spent to pay outside experts in energy economics, marine radar, aviation radar, environmental regulation (endangered species, etc.) and legal aspects pertaining to this case; these experts' comments then were bound and submitted as official comments on the DEIS. Has the Globe read these documents? I am not aware of one penny being spent to hire a consultant in aesthetics. The charge is that the Alliance is based on NIMBYISM. This is wholly false. Cape Wind's aesthetics are a concern, and they should be. However, from its inception the Alliance has voiced its concerns principally in terms of the project's cost effect on regional energy, safety and destruction of the natural environment. They have also attempted to shine the light of reason on the undeniable fact that Cape Wind has been allowed review under relaxed federal regulations, sometimes ignored regulations.

Anyone who has truly followed this nine year saga, even a Boston Globe reporter, would know this. Now that Jim Gordon's own contract offer shows him to be the liar many have always felt him to be....the Globe continues to cover for him and kiss his PPA. How far the mighty have fallen. It is unfortunate that one otherwise very credible reporter whose specialty is environmental matters has been hung out to dry by the Globe. Where is the Globe's in-house expert analyisis of cape Wind's costs? Where is the Globe's outrage at the fact that the final numbers show Gordon's long boasted savings claim to be a lie? Where are the headlines? Where are the editorials? Cape Wind is a textbook case of bad government at its best ably supported by an ignorant press.

Will we ever read any of this in the Boston Globe?

Copyright 2010 BY Peter A. Kenney


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