Massachusetts Approves Solicitation Process for Offshore Wind

Consistent with a state law passed a year ago that was aimed at promoting renewable resources, especially offshore wind power, the Massachusetts Department of Public Utilities (DPU) has accepted the proposed wind energy solicitation guidelines advanced by five electric utilities within the state. The plans submitted by the utilities cover both a timetable for their respective requests for proposals (RFPs) and the methods to be used in issuing the RFPs and executing associated long-term power purchase agreements.

Among the participating utilities are Fitchburg Gas & Electric Light Company d/b/a Unitil, and two subsidiaries of National Grid: Massachusetts Electric Company and Nantucket Electric Company. The last two of the five utilities (NSTAR Electric Company and Western Massachusetts Electric Company) are affiliated with Eversource Energy.

Under House Bill 4568, which was signed into law in August of 2016, the utilities were charged with obtaining a total of at least 1,600 megawatts (MW) of offshore wind capacity by June 30, 2027 (see Letter No. 4283). The utilities had until the end of June of this year to send out their initial RFPs for wind power.

First, though, they needed to get DPU authorization to proceed with their planned RFPs. To that end, the five utilities jointly proffered an RFP process, which incorporates a general policy of soliciting offshore wind energy in a fair and nondiscriminatory fashion and then entering into cost-effective long-term power purchase agreements with the winning bidders.

As required by state law, the utilities told the DPU that the bid review process would be monitored by an independent entity, to be selected in consultation with the Massachusetts Department of Energy Resources as well as the state attorney general. According to the RFP outline tendered by the utilities, all bids will be evaluated in a three-step process.

In the first stage, the bids will be checked to assure the bidders meet all eligibility and threshold requirements. Second, the bids will undergo a quantitative and qualitative appraisal. The final step involves the selection of winning bidders based on their viability and potential to provide both cost-efficient and reliable energy with but limited associated risks.

The department found that the bidding and evaluation procedures put forth by the utilities were both reasonable and appropriate, and it therefore permitted the utilities to commence the first round of RFPs. Pursuant to the timeline recommended by the utilities, potential bidders had until July 26 to indicate their interest in participating in the solicitation.

Bidders will then have until December 20, 2017 to submit their actual bids. According to the utilities, they plan to select the winners by the end of April in 2018, followed by negotiation and execution of associated long-term power purchase contracts by the end of July of 2018.

The department noted that the initial RFPs are expected to account for 400 MW of offshore wind capacity. However, it said, the utilities may increase that amount to as much as 800 MW if they can show that a larger-sized project is likely to provide greater net economic benefits overall. Re Fitchburg Gas & Electric Light Co. d/b/a Unitil et al., D.P.U. 17-103, June 21, 2017 (Mass.D.P.U.).