January 22, 2014
NSTAR's no-bid contract to purchase electricity from Cape Wind at three times the price of competing out-of-state green energy violates federal law and would unfairly burden ratepayers, according to a suit filed in U.S. District Court by the Town of Barnstable, businesses, residents, and the Alliance to Protect Nantucket Sound.
The suit against Massachusetts regulators, NSTAR, and Cape Wind says the State discriminated against out-of-state companies - despite their lower costs - by pressuring NSTAR to buy power from in-state generator, Cape Wind. Massachusetts regulators also exceeded their authority in setting wholesale rates for this contract.
"This state action was illegal for two independent reasons. First, it constituted illegal discrimination in favor of an in-state business, in violation of the dormant Commerce Clause of the U.S. Constitution," the suit alleges. "Second, it constituted illegal regulation of wholesale electricity sales, in violation of the Federal Power Act and the Supremacy Clause of the U.S. Constitution."
"We understand the need for green energy, but it is unfair to be forced to pay three times more for Cape Wind," said plaintiff, Joe Keller, President of Keller Company Inc.
The suit says that NSTAR sought to comply with the Massachusetts requirement that a percentage of power come from renewable sources by buying green energy that was cheaper than Cape Wind. However, the complaint alleges that state regulators refused to support NSTAR's long-sought merger with Northeast Utilities until NSTAR contracted to buy the higher priced Cape Wind power.
"According to NSTAR's own estimates, the unconstitutional NSTAR-Cape Wind contract will increase the electricity bills of NSTAR customers by nearly one billion dollars over the life of the contract," the suit alleges.
Recent court decisions in New Jersey and Maryland found that state programs directing utilities to sign long-term contracts were unconstitutional.
"Our case alleges that NSTAR was coerced into signing a no-bid contract that violates federal law," said Audra Parker, President and CEO of the Alliance. "The State's actions are even more disturbing given the increasing availability of alternative energy available at a fraction of Cape Wind's price."
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