Tax credits key factor in Cape Wind energy cost

National Grid and Cape Wind submitted testimony Friday to the state Department of Public Utilities to support a deal they have cut for half the power generated by the Nantucket Sound wind farm.

But at least one vocal opponent of the project is claiming the state agency should restart the clock in its review of the agreement because of an error in the public notice of the case.

“The DPU notice is flawed, deceptive and misleading,” said Barbara Durkin, a longtime opponent of the plan by Cape Wind Associates LLC to build 130 wind turbines in the Sound.

Durkin sent a letter to the state inspector general in which she also questioned the likelihood that Cape Wind would be completed in time to take advantage of tax credits.

The DPU notice announcing the public hearings on the energy deal incorrectly states that a price of 20.7 cents per kilowatt hour for power from Cape Wind's turbines assumed the project would receive two types of federal tax credits.

Projects such as Cape Wind are typically only allowed to take advantage of one of the tax credits – either an investment tax credit equal to 30 percent of the project's cost or a production tax credit based on the energy the project produces.

The DPU simply included what National Grid told the state agency, spokesman Tim Shevlin said Friday.

This type of error does not invalidate the notice because it is immaterial to the purpose of notifying the public of the hearings, according to Robert Keough, a spokesman for the state Executive Office of Energy and Environmental Affairs.

“We fully expect there to be interest in this proposed contract among the public,” he wrote in an e-mail to the Times.

There are three hearings scheduled across the state to gather public comment on the agreement, including at Nantucket High School on June 21 at 6 p.m.
In separate interviews with the Times Friday, Cape Wind and National Grid officials agreed the notice was wrong but said that the proposed price for the power is based on the project receiving the more lucrative investment tax credit and that they expect to get the tax credit.

If the project does not receive the investment tax credit, the price National Grid would pay for the Cape Wind power would increase to 22.8 cents per kilowatt hour, according to the power purchase agreement the companies filed with the state. If the production tax credit is not granted, the price would go up to 23.5 cents per kilowatt hour.

“We have every reason to believe that they are going to be extended and supported by Congress,” National Grid deputy general counsel Ronald Gerwatowski said Friday of the tax incentives.