Wal-Mart Challenges Higher Electricity Costs From Cape Wind

by | Jun 18, 2010

In a challenge filed with the state, Wal-Mart said the high prices set by a contract between Cape Wind and National Grid will result in higher electricity costs for the retailer, which is currently paying more than $2 million a year to power 28 Massachusetts stores served by National Grid, reports Boston.com.

Bill Wertz, a spokesman for the retailer, said in the article that Wal-Mart “supports the intent of the Cape Wind project,” but questions National Grid’s cost estimates and how those costs will be passed on to customers

National Grid has agreed to pay 20.7 cents per kilowatt hour, starting in 2013, for half the power generated at Cape Wind’s planned 130-turbine wind farm in Nantucket Sound, reports Bloomberg Businessweek. In comparison, power from conventional sources now costs about nine cents per kilowatt hour.

The agreement is subject to approval by the Department of Public Utilities, which held the first of three planned public hearings to discuss the contract.

National Grid expects that buying power from Cape Wind will result in an increase three years from now by $1.59 per month for a typical home’s electric bill (PDF), which is about 5 cents a day, says Cape Wind.

The project also touts benefits such as  new jobs, cleaner air, reduced reliance on oil, coal and gas as well as making Massachusetts a leader in offshore clean energy.

A recent Cape Wind study finds its 468-megawatt offshore wind project will reduce wholesale electric prices for the New England region by $4.6 billion over 25 years by reducing the operations of fossil fuel, and the price of power in the New England wholesale market would be $1.22/MWh lower on average from 2013 to 2037 with Cape Wind.

Massachusetts utilities will have to buy at least 15 percent of their power from renewable energy sources by 2020, and pay a premium of 6.1 cents per kilowatt hour for renewable power, which is seen as part of the price for jump-starting a clean-energy industry in the state, reports Boston.com.

Cape Wind opponents such as the Alliance to Protect Nantucket Sound and trade group Associated Industries of Massachusetts of Cape Wind told the newspaper that Wal-Mart’s challenge is further proof that Cape Wind is a bad deal.

Some advocates such as linen manufacturer John Matouk & Co. believe the higher cost  is a reasonable price to pay for cleaner energy.

Renewable energy advocates also said in the article they were surprised by Wal-Mart’s challenge to the contract because of the retailer’s commitment to clean energy and reducing carbon emissions. Wal-Mart recently installed wind turbines at a new store in Worcester.

The governors of 10 East Coast states including Massachusetts recently signed a Memorandum of Understanding (MOU) that establishes an Atlantic Offshore Wind Energy Consortium to promote the responsible development of wind resources off the east coast.

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