COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF PUBLIC UTILITIES
) Petition of NSTAR Electric Company d/b/a ) Eversource Energy for Approval of Proposed ) Long-Term Contracts for Offshore Wind ) D.P.U. 18-76 Energy Generation Pursuant to Section 83C of an Act Relative to Green Communities, St. ) 2008, c. 169, as amended by St. 2016, c. 188, ) §12 ) )
) Petition of Massachusetts Electric Company ) and Nantucket Electric Company d/b/a National ) Grid for Approval of Proposed Long-Term ) D.P.U. 18-77 Contracts for Offshore Wind Energy Generation Pursuant to Section 83C of an Act Relative to ) Green Communities, St. 2008, c. 169, as ) amended by St. 2016, c. 188, §12 ) )
) Petition Fitchburg Gas and Electric Light ) Company d/b/a Unitil for Approval of Proposed ) Long-Term Contracts for Offshore Wind ) D.P.U. 18-78 Energy Generation Pursuant to Section 83C of an Act Relative to Green Communities, St. ) 2008, c. 169, as amended by St. 2016, c. 188, ) §12 ) )
VINEYARD WIND LLC’S INITIAL BRIEF
Vineyard Wind LLC (“Vineyard Wind”) submits this Initial Brief in support of the petitions submitted by NSTAR Electric Company d/b/a Eversource Energy,
Massachusetts Electric Company and Nantucket Electric Company d/b/a National Grid, and Fitchburg Gas and Electric Light Company d/b/a Unitil (collectively, the
“Distribution Companies”) in the above-referenced proceedings.
Each Distribution Company seeks approval of two long-term power purchase agreements (“PPAs”) with Vineyard Wind, each for 400 MW of offshore wind energy
generation, for the purchase of each company’s pro rata share of energy and Renewable
Energy Credits produced by Vineyard Wind’s combined 800 MW offshore wind project
(the “Project”). The parties executed the PPAs pursuant to Section 83C of An Act
Relative to Green Communities, St. 2008, c. 169 (as amended by An Act to Promote
Energy Diversity, St. 2016, c. 188, § 12) (“Section 83C”), which seeks to “facilitate the financing of offshore wind energy generation resources in the commonwealth.” Under
Section 83C, the Distribution Companies, by 2027, must procure offshore wind energy generation “equal to approximately 1,600 megawatts of aggregate name plate capacity.”
Section 83C further requires the Distribution Companies to assess offshore wind project proposals against several factors set out in the statute and the attendant
Department of Public Utilities (“Department”) regulations, 220 C.M.R. § 23.00, et seq., to ensure that such projects will enhance grid reliability, avoid or mitigate environmental impacts, and be cost-effective for New England ratepayers. Following the initial 83C competitive solicitation, the Distribution Companies chose Vineyard Wind’s 800 MW
Project as the winner.
The Vineyard Wind Project represents a bold step in the Commonwealth toward large-scale clean energy generation and away from reliance on fossil fuels. It will generate up to 800 MW of emissions-free electricity that will cut carbon pollution by over one million tons per year, bringing the Commonwealth closer to hitting the aggressive emissions targets it set in the Global Warming Solutions Act, St. 2008, c. 298.
See Vineyard Wind Request for Proposal Application Form (“RFP Response”),1 Section
1 The Highly Sensitive Confidential version of Vineyard Wind’s completed Section 83C Request for Proposal Application Form is included in the Distribution Companies’ initial filing at WP Support Tab B. In order to file this brief on the public record without redactions, Vineyard Wind has cited to the public version of its Section 83C Request for Proposal Application Form, which is available at the Massachusetts
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13.3, at 191.2 At the same time, the Project will grow the Massachusetts economy. A
University of Massachusetts report estimates that the Project will create over 3,600 full- time equivalent jobs, many of them for residents of Southeastern Massachusetts.
Vineyard Wind also plans to invest in programs to recruit and train a Massachusetts- based clean energy workforce.
For these and the other reasons set out below, the Vineyard Wind Project satisfies the criteria set forth in Section 83C and the Department’s regulations governing long- term contracts for offshore wind energy. See 220 C.M.R. 23.05. Accordingly, the
Department should grant the Distribution Companies’ petitions and approve the PPAs.
I. BACKGROUND AND PROCEDURAL HISTORY
On July 31, 2018, each of the Distribution Companies filed Petitions for Approval of Proposed Long-Term Contracts for Offshore Wind Energy Generation Pursuant to
Section 83C of An Act Relative to Green Communities, St. 2008, c. 169, as amended by
St. 2016, c. 188, § 12.
The petitions seek approval of the PPAs under Section 83C and 220 C.M.R. §
23.00. The Distribution Companies also ask to be able to recover the costs associated with the PPAs, including remuneration equal to 2.75 percent, through each Distribution
Company’s renewable contract cost recovery tariff provisions. Exh. JU-1, Joint
Testimony of Waltman/Brennan/Glover, at 8 (July 31, 2018).
Clean Energy website, https://macleanenergy.com/83c/83c-bids/, Vineyard Wind, 800 MW bid, Appendix B. 2 See also Vineyard Wind Connector: Final Environmental Impact Report (“Vineyard Wind FEIR”) (Dec. 17, 2018), available at https://www.vineyardwind.com/feir.
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Vineyard Wind moved to intervene on August 21, 2018 and was granted full- party intervenor status on August 28, 2018. See Hearing Officer Ruling on Petitions to
Intervene, at 2 (Sept. 5, 2018).3
The Department set February 8, 2019 as the deadline for initial briefs, but on
October 24, 2018, Vineyard Wind moved to advance that deadline to January 30, 2019.
The Department granted that motion on October 30, 2018 and amended the procedural schedule accordingly.
The Department held evidentiary hearings on January 7 and 10, 2019.
Pursuant to its rights as a full-party intervenor and the procedural schedule the
Department has adopted, Vineyard Wind submits this Initial Brief.
II. STANDARD OF REVIEW
Section 83C and 220 C.M.R. § 23.00 et seq. require that long-term contracts entered into by a Distribution Company must be executed with offshore wind energy generating resources that satisfy the following factors:
(1) provide enhanced electricity reliability;
(2) contribute to reducing winter electricity price spikes;
(3) be cost effective to Massachusetts electric ratepayers over the term of the contract taking into consideration potential economic and environmental benefits to the ratepayers;
(4) avoid line loss and mitigate transmission costs to the extent possible and ensure that transmission cost overruns, if any, are not borne by ratepayers;
3 The Department also granted full-party status to the Department of Energy Resources (“DOER”), Bay State Wind LLC, Conservation Law Foundation, Low-Income Weatherization and Fuel Assistance Program Network, and Power Options. See Hearing Officer Ruling on Petitions to Intervene at 2, 7 (Sept. 5, 2018). It granted limited participant status to Associated Industries of Massachusetts and Anbaric Development Partners in the three above-referenced proceedings, and to the Energy Consortium and the Western Massachusetts Industrial Group in only D.P.U. 18-76. Id. at 2.
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(5) adequately demonstrate project viability in a commercially reasonable timeframe;
(6) allow Offshore Wind Energy Generation resources to be paired with energy storage systems;
(7) mitigate any environmental impacts, where possible;
(8) where feasible, create and foster employment and economic development in Massachusetts; and
(9) be a cost-effective mechanism for procuring reliable renewable energy on a long-term basis taking into account the above factors.
Section 83C and its attendant regulations also state that DOER shall give preference to project proposals that demonstrate a benefit to low-income ratepayers in Massachusetts, without adding cost to the project. Section 83C; 220 C.M.R. § 23.04(10).
III. THE PROJECT SATISFIES ALL REQUIRED FACTORS.
A. The Project Will Provide Enhanced Electricity Reliability.
Ample evidence shows that the Project will enhance reliability, particularly in the lower Southeastern Massachusetts (“SEMA”) load zone. See Exh. JU-1 at 29-30. That zone has seen significant generation retirements, and more are expected. Id. at 29; RFP
Response, Section 3.3, at 15-16. The Project will restore lost generation and capacity by injecting up to 800 MW into the lower SEMA region. Exh. JU-1 at 29-30. It will also enhance reliability by providing fuel diversification there. Id.
Moreover, the Project will improve consistency in wind generation in New
England. Id. at 30; RFP Response, Section 3.3, at 15-16. New England’s primary wind generation resources are in the north. Id. As weather varies, those resources strain to meet generation needs. Id. The Project will be located in an area that is geographically distinct from the location of those existing resources, thereby adding to available
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generation resources for management of the bulk power system in areas where other generation resources struggle to meet the need. See id.
B. The Project Will Contribute to Reducing Winter Electricity Price Spikes.
The Project will boost energy production levels during the winter peak period,
October to May, when demand for natural gas pipeline capacity is at its highest, and it will deliver local generation during the winter in an area of the Commonwealth where the natural gas system is stressed. RFP Response, Section 3.4, at 17. This will help address demand spikes, while reducing reliance on fossil fuel. Exh. JU-1 at 30. Thus, the Project will not be affected by the risk of potential fossil fuel shortages and will help to alleviate price volatility. Id.
A leading energy policy and analysis firm, Daymark Energy Advisors, confirmed this in a study that assessed how an 800 MW wind project, like the Vineyard Wind
Project, would have performed during the nearly four-day “bomb cyclone” storm in
January 2018.4 That storm caused wholesale natural gas prices in New England to swell to about ten times the 2017 annual average price.5 An operational 800 MW wind project would have reduced fossil fuel use during the bomb cyclone storm, resulting in a sharp reduction in wholesale electricity prices.6
4 Study: Massachusetts Offshore Wind Farm Would Have Substantially Curtailed Environmental and Grid Impacts Created by “Bomb Cyclone” (Jan. 29, 2018), available at https://www.vineyardwind.com/news- and-updates/2018/1/29/bombcyclone. 5 Id. 6 Id. See also ISO New England System Planning Department, High-Level Assessment of Potential Impacts of Offshore Wind Additions to the New England Power System During the 2017-2018 Cold Spell (Dec. 17, 2018), available at https://www.iso-ne.com/static-assets/documents/2018/12/2018_iso- ne_offshore_wind_assessment_mass_cec_production_estimates_12_17_2018_public.pdf.
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C. The Contracts Will Be Cost-Effective for Customers.
The Distribution Companies solicited the PPAs in a way that would ensure cost- effectiveness—through a competitive bid process, which is the Department’s preferred method for selecting a cost-effective project. Exh. JU-1 at 30; see, e.g., D.P.U. 17-117/
17-118/17-119/17-120; D.P.U. 07-64-A; D.T.E. 02-40; D.T.E. 99-60. The Request for
Proposal (“RFP”) went to all eligible bidders with federal wind-area lease rights, as
Section 83C requires. Id.; see also Exh. JU-2 (final RFP issued on June 29, 2017). This process received Department approval in D.P.U. 17-103. Exh. JU-1 at 30-31.
The RFP process was also administered fairly by the EDCs to ensure the selection of a cost-effective bid. See id. Bids were evaluated against a common market price forecast by consultant Tabors Caramanis Rudkevich (“TCR”). Id. at 31. TCR’s and the
Evaluation Team’s analyses indicate that the contracts will be cost-effective. Id.; see generally Exh. JU-4 (Redacted). The EDCs also recognized that Vineyard Wind’s 800
MW proposal would prove more effective than a 400 MW proposal at pushing down prices for future wind projects. Exh. JU-1 at 31.
The TCR’s and Evaluation Team’s analyses also show that over the 20-year contract period, the Project will provide $1,289 million (nominal $) in projected below- market costs (benefits) to Massachusetts customers. Id.; Exh. DPU-3-1. And because the
Project’s wind turbines will generate no carbon emissions, the Project will result in significant emissions reduction savings—$152 million, relative to a similar project coming online two years later, and $224 million, relative to a similar project coming online three years later. RFP Response, Section 13, at 191.
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D. The Project Will Avoid Line Loss and Mitigate Transmission Costs and Ensure that Transmission Cost Overruns Are Not Borne by Customers.
The Project provides a fixed cost for the quantity of energy and associated RECs produced, as measured by the delivery point onshore. Exh. JU-1 at 31-32. Thus, line loss risk and the costs associated with the generator lead line and interconnection to the delivery point onshore are borne by Vineyard Wind. Id.
Additionally, Vineyard Wind will avoid line loss and mitigate transmission cost overruns by providing a highly efficient transmission design with the shortest feasible route to shore and highest feasible voltage level, all at a fixed price. RFP Response,
Section 2, at 10; see also Exh. JU-1 at 31-32. The offshore and onshore routes will take the most direct path feasible while avoiding or minimizing disturbances to sensitive habitats and local communities. RFP Response, Section 15.2, at 227. The Project also avoids line loss through offshore and onshore substation configuration, including by selecting a substation site next to the transmission system point of interconnection. Id.
E. The Project Demonstrates Viability in a Commercially Reasonable Timeframe.
This factor is satisfied in at least three ways. First, the PPAs contain incentives supporting Project completion within a commercially reasonable timeframe. They set forth milestones that Vineyard Wind must meet towards the achievement of the guaranteed Commercial Operation Dates for the Project and also require that Vineyard
Wind post financial security to secure its obligations to develop the projects and to deliver energy and RECs throughout the term of the PPAs. Exh. JU-1 at 32; see also
Exh. JU-1 Joint Supplemental Testimony of Waltman/Brennan/Glover, at 4 (Oct. 2,
2018).
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Additionally, Vineyard Wind’s project schedule is based on the schedules for similar projects that have been completed in Europe. RFP Response, Section 2, at 3. The schedule has also been validated through significant interaction with the supply chain companies that will help achieve an early project delivery, as shown by the letters of support and customer interest included in Vineyard Wind’s RFP response. Id. Finally,
Vineyard Wind is far along in securing permits for the Project, including Bureau of
Ocean Energy Management (“BOEM”) review of facilities in federal waters and
Massachusetts Environmental Policy Act (“MEPA”) Office and Energy Facilities Siting
Board (“EFSB”) review of facilities in state waters and on Cape Cod. See RFP
Response, Section 2, at 11, Section 6.7
F. The Project Allows Its Generation Resources to be Paired with Energy Storage Systems.
As part of implementing the Project, Vineyard Wind will establish the Resiliency and Affordability Fund with partners Citizens Energy and Vineyard Power Cooperative.
See Exh. JU-1 at 33-34; RFP Response, Section 2, at 10.8 The Fund will invest in projects designed to promote the use of distributed battery storage in low-income communities. See Exhs. JU-1 at 33; DPU-3-2. Specific projects might include battery back-up and solar projects at emergency services buildings, hospitals, and emergency shelters that will make host communities safer and more energy resilient when battling coastal storms. RFP Response, Section 14.6, at 205-206. Vineyard Wind will contribute
$1 million to the Fund every year for 15 years. Exh. JU-1 at 33.
7 See also Vineyard Wind LLC, EFSB 17-05/D.P.U. 18-18/18-19, Exh. EFSB-G-8(S2) at Table 1. 8 See also Letter from Lars T. Pederson to Commissioner Judith Judson, DOER, (“DOER Letter Agreement”) RE: Vineyard Wind’s Commitments to the Offshore Wind Accelerator Program and the Resiliency and Affordability Program and Fund (Jan. 10, 2019), available at https://vineyardwind.box.com/s/lqtax59cyt4zlrb6o8vctn79hahkhqod.
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In addition, the Project’s interconnection point will allow energy the Project generates and delivers to the Distribution Companies to be subsequently delivered to an appropriate energy storage provider if one is available and wishes to provide its services.
Exh. DPU-3-2.
G. The Project Avoids or Mitigates Environmental Impacts.
Vineyard Wind has worked to avoid or mitigate environmental impacts since the
Project’s inception. It has engaged in extensive outreach to federal, state and local agencies, and all manner of stakeholders, including fisheries stakeholders for whom
Vineyard Wind’s fisheries liaisons have organized over a hundred meetings. Exh. JU-1 at 33. In its bid proposal to the Distribution Companies, Vineyard Wind outlined its plans to avoid or mitigate environmental impacts. See id.; RFP Response, Sections 7.3 and 7.4, at 80-94. It has further developed those plans, setting them out in its BOEM,
MEPA, and EFSB permitting filings.9 Vineyard Wind’s RFP Response and regulatory filings explain that the Project will avoid or mitigate air, noise, wetlands, water quality, visual, traffic, navigation, and fishing impacts. They also address avoiding or mitigating impacts on sensitive land uses, historic and archeological resources, and rare, threatened, or endangered species.10
H. The Project Will Create and Foster Employment and the Commonwealth’s Economic Development.
A study by the UMass Dartmouth Public Policy Center found that the Project will support more than 3,600 full-time equivalent jobs over its 25-year operations phase.
9 See, e.g., Draft Construction and Operations Plan (Oct. 22, 2018), available at https://www.boem.gov/Vineyard-Wind; Vineyard Wind FEIR; Initial Brief of Vineyard Wind LLC, EFSB 17-05/D.P.U. 18-18/18-19, at 134-95 (Nov. 28, 2018). 10 Vineyard Wind also recently entered into an agreement with environmental organizations to ensure that the Project does not endanger North American right whales. See Vineyard Wind-NGO Agreement (Jan. 22, 2019), available at https://vineyardwind.app.box.com/s/po4b624anvqraghgadm11k7cipjc16r3.
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Exhs. JU-1 at 32; DPU-3-9; RFP Response, Section 14.1, at 197-200. Over 90% of those jobs are expected to be in Massachusetts. Exh. DPU-3-9. They include engineering, construction, legal, and managerial jobs. Id. Vineyard Wind has already contributed to employment in the Commonwealth through an estimated 120-plus full-time equivalent jobs. RFP Response, Section 14.1, at 197. And an estimated 1,426 full-time jobs will be created during Project construction, about 1,200 of which will be located in the SEMA region. Id. at 198.
Vineyard Wind will also promote job growth by helping implement the Offshore
Wind Accelerator program. See Exh. JU-1 at 32; RFP Response Section 14.3, at 201.11
The program will have three key components. The first is a $10 million contribution to the Offshore Wind Industry Accelerator Fund to be managed in consultation with clean energy stakeholders. Exh. JU-1 at 32. That money will go to projects and initiatives to speed the development of business and infrastructure support for a Massachusetts offshore wind supply chain. Id.
The second component is a $2 million contribution to the Windward Workforce
Training and Career Development Program to help recruit and prepare Massachusetts residents—particularly residents in Southeast Massachusetts—for careers in offshore wind. Id.; RFP Response, Section 14, at 195-197. Vineyard Wind has also set a goal of hiring an operations and maintenance staff consisting entirely of Martha’s Vineyard residents within five years after the Project comes online.
And finally, as part of the Accelerator program, Vineyard Wind will contribute $3 million to a Marine Mammals Protection Fund for enhancing protections for marine
11 See also DOER Letter Agreement.
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mammals as the Massachusetts offshore wind industry continues to grow. Exh. JU-1 at
32-33.
I. The Project Will be a Cost-effective Mechanism for Procuring Reliable Renewable Energy on a Long-term Basis Taking into Account the Above Factors.
For the reasons stated above, the evidence shows that the Project and the PPAs are cost-effective mechanisms that satisfy the Section 83C factors. Moreover, the Project was the highest-ranking proposal the Distribution Companies received during the competitive solicitation process. Exh. JU-1 at 34. That ranking was based in large part on the Project’s achieving the highest possible score of 75 points in the quantitative assessment of bids. See Exhs. JU-4 (Redacted) at 27; JU-5 (Redacted) at 3. The assessment consisted of calculating the costs of each bid and its direct and indirect benefits to customers. Exh. JU-1 at 21; see id. at 20-24 (describing the quantitative assessment); Exh. JU-4 (Redacted), App. 3, at 26 (same).
J. The Project Will Benefit Low-Income Ratepayers in the Commonwealth.
The focus of the Resiliency and Affordability Fund will be on low-income and community benefits. Exh. JU-1 at 33.12 Part of Vineyard Wind’s yearly $1 million contribution to the Fund will go to providing credits on low-income customer’s electric bills. Id. Vineyard Wind will work with Citizens Energy, an organization with a long history of implementing energy ventures with significant benefits to low-income households. RFP Response, Section 14.6, at 205-206. The Fund’s support for battery back-up and solar projects at emergency services buildings, hospitals, and emergency shelters will also benefit low-income communities. Id.
12 See also DOER Letter Agreement.
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Respectfully Submitted,
Vineyard Wind LLC
By its attorneys:
Kevin Conroy, k Kelly Caiazzo•--/ FOLEY HOAG LLP 155 Seaport Boulevard Boston, MA 02210-2600 617-832-1000 [email protected] [email protected]
Dated: January 30, 2019
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