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Regulators scold Avangrid over timing of ‘no longer viable’ claim for offshore wind

Regulators warned that renegotiating major contract terms would set the contract approval process back months, not weeks.

Backers of Commonwealth Wind and Mayflower Wind got a cold reception from Massachusetts regulators in their bid to reopen power purchase agreements they say may no longer be economically viable. 

In a decision issued Nov. 4, the Department of Public Utilities took issue with the argument from Avangrid Renewables that its 1,200 MW Commonwealth Wind project was “no longer viable and would not be able to move forward” without changes to the contracts between the developer and utility companies. The changes would likely delay the offshore wind project’s launch date and make its power more expensive.

In a news report from WBUR that detailed the regulatory action, Mayflower Wind was named as supporting Commonwealth Wind’s bid for a month-long pause in the review of the projects’ power purchase agreements. The news outlet said that utilities buying the power said they had no plans to renegotiate.

Regulators gave developers three business days to say whether they would work with the existing contracts or walk away from the proceedings.

“[R]esidents and businesses that financially support these contracts deserve certainty whether the Projects, if approved by the Department, will deliver consistent with the PPAs Commonwealth Wind and Mayflower Wind executed after a competitive solicitation,” the DPU order signed by Chairman Matt Nelson said.

Commonwealth Wind said in a motion filed on Oct. 20 that price increases, supply shortages and interest rate hikes had changed the project’s economics so much that it might not be able to secure financing to build the project.

The regulatory order said that, “While the Department will not speculate as to when Commonwealth Wind first determined its Project was no longer viable under the terms of the PPAs, it is evident that the economic impacts of the COVID-19 pandemic and war in Ukraine on its Project became apparent some time before Commonwealth Wind notified the Department.”

It scolded Commonwealth Wind for waiting until the PPA investigation process was nearly finished before raising doubts about the PPAs’ viability. 

“Of course, a party will be held to the predictable consequences of its strategic choices, regardless of outcome,” the regulatory decision said.

It also warned that renegotiating major contract terms like the price of the power generated would set the contract approval process back months, not weeks.

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