Campbell at odds with Healey on offshore wind

ATTORNEY GENERAL Andrea Campbell and Gov. Maura Healey are the closest of political allies, but they are staking out very different positions on the state’s next offshore wind procurement.

The Healey administration is proposing a very large procurement of up to 3,600 megawatts to not only make up for 2,400 megawatts worth of projects that were previously approved and now on the verge of being terminated but also push ahead with 1,200 megawatts of new wind.

The procurement, as drafted, doesn’t require the Healey administration to go for the full 3,600 megawatts, but industry officials are pushing for the full amount or urging even more. And it seems like that’s where administration officials want to go.

“I do agree with the sense of urgency to continue on our clean energy procurements and the benefits that we’re going to see from the offshore wind industry,” said Rebecca Tepper, Healey’s secretary of energy and environmental affairs, at a field hearing in Maine of the Federal Energy Regulatory Commission last week. “It’s too valuable of a resource for it not to happen. So full press on offshore wind, full press on the transmission to support it, full press on the transmission to support clean energy, and full press on the tie lines to bring in renewables from other regions.”

Campbell, by contrast, is taking the temperature of energy markets and concluding that pushing for the maximum procurement now would lock Massachusetts ratepayers into 20-year contracts at a time when prices are at an “unprecedented high.”

The pricing environment is precarious on a variety of fronts. The winners of the last two procurements say the power purchase agreements they signed are no longer sufficient to secure financing for the projects because of changing economic conditions, including rising interest rates, inflation, supply chain disruptions, and the war in Ukraine. The two developers want to terminate their power purchase agreements and rebid their projects in the next procurement next year.

The uncertain economic conditions are not expected to disappear any time soon—which is why the next procurement includes a price escalator clause that could push up the agreed-upon price by 15 percent if economic turmoil continues. Offshore wind developers also say the cost of connecting wind farms to the regional power grid is expected to rise.

All this uncertainty coincides with the disappearance of the state’s offshore wind price cap, which required the winning bid in each procurement to come in at a lower price than the winning bid in the previous procurement. The price cap was removed by the Legislature in July 2022, so there will be no limit on what can be charged in the upcoming procurement.

In a filing with the Department of Public Utilities, which must approve the Healey administration’s request for proposals, Campbell’s office said a smaller procurement may be wiser given all the uncertainty right now.

“The  attorney general’s office is concerned that a procurement of this proposed size, combined with a number of factors described further below—including the possible failed third offshore wind procurement, uncertain global economic conditions, the lack of a price cap, and the myriad of issues surrounding adequate offshore wind interconnection and transmission infrastructure—will very likely lead to inflated costs for ratepayers in this procurement offering, which might be avoidable if the Commonwealth were to proceed in a more measured and deliberate manner,” Campbell’s filing said.

The attorney general is suggesting a procurement of no more than 1,600 megawatts, with followup procurements every year for similar amounts.

Campbell’s disagreement with Healey on the offshore wind procurement is one of the first to emerge since they took office in January. Healey endorsed Campbell as her replacement as attorney general and campaigned aggressively on her behalf during the Democratic primary, giving her a huge leg up on her two rivals. One of those rivals subsequently dropped out of the primary race and Campbell went on to win the primary and then the general election.

Campbell’s office declined comment on Friday.

In their filings with the DPU, the offshore wind developers and the Healey administration said it makes sense to go with a larger rather than a smaller procurement.

Healey’s Department of Energy Resources stressed that accepting bids for up to 3,600 megawatts doesn’t mean it will contract for the full amount. The agency said it would pick and choose the best projects at the best prices.

Avangrid, which is seeking to cancel and rebid its Commonwealth Wind project, took the same approach in its comments. “With a larger procurement, the selection committee has the opportunity to review what the market can deliver in terms of price, job creation, supply chain, etc., and can choose to award less than the maximum procurement volume if the benefits of a larger award are not compelling,” said Avangrid. “Limiting the procurement authority to 1,600 megawatts at the outset, as the attorney general’s office recommends, eliminates the possibility of this ideal outcome (i.e., increased investment paired with affordable energy prices) at a time when other states are aggressively positioning themselves to attract the investment and benefits associated with developing a domestic offshore wind industry.”

SouthCoast Wind, which is also seeking to terminate a power purchase agreement and rebid its project, also backed a bigger procurement. “We believe this action best supports the state’s decarbonization goals,” the developer said.