Massachusetts' three electricity companies have submitted their contracts to the state's Department of Public Utilities, after negotiating a rate of 6.5 cents per kilowatt hour with offshore wind company Vineyard Wind.
The rate is higher than the current wholesale rate for energy, around 3 to 4 cents per kilowatt hour, but much lower than the previously proposed price for offshore wind energy negotiated with Cape Wind, which was 18 cents per kilowatt hour. For a $100 electricity bill, consumers should see a savings of around 20 to 40 cents, according to the state.
Christopher Geehern, Executive Vice President of Associated Industries of Massachusetts said that he and the employers he represents are pleased about the rate, because it shows offshore wind can be sold at a price that won't hurt consumers.
"What you’re seeing is Massachusetts slowly migrating from carbon-based generation to non-carbon-based generation, and the good news is we’re doing it in a way that’s not bankrupting homeowners and businessowners who have to pay their electric bill," he said, adding that when Cape Wind released its rate years ago, many balked at how expensive it was.
Massachusetts consumers currently pay about 14 cents per kilowatt hour for electricity, a rate that is one of the highest in the country. While the new rate won't likely result in much tangible difference in electricity bills for consumers, he said the rate is a positive step for the renewable energy industry.
"That shouldn’t take away from the fact that this is really good news, this is good pricing, and I think the pricing models are definitely going in the right direction," Geehern said.
Vineyard Wind has attributed their drastically lower rate to the fact that offshore wind technology has advanced in the last few years and turbines are more powerful and efficient now. Experts also say the competitive bid process enacted by the state, and a 20-year power purchase agreement with the company, has contributed to a lower rate, as has a federal investment tax credit which will add about $200 million in savings for the company.
Next, the Department of Public Utilities is expected to hold a public hearing on the rates before construction on the wind farm begins next year.