The New York Public Service Commission on Thursday denied petitions from Ørsted, Equinor and BP to adjust offshore wind contracts, which the PSC said would have cost ratepayers billions of dollars.
State municipal utilities and other intervenors warned the PSC that allowing the contract adjustments would “increase ratepayer costs by a total of $29.76 billion over the contract terms.”
This would result in cost increases of between 2.3% and 6.7% in each energy bill for residential customers, and between 2.5% and 10.5% for commercial customers, NYPSC estimated.
The developers sought the adjustments to compensate for financial struggles facing the offshore wind industry in the U.S., which they say threaten their ability to complete these projects.
The NYPSC noted that in its petition seeking a contract adjustment for their 924-MW Sunrise Wind project, Ørsted said “the project’s financial profile has worsened markedly — so much so that it is now not a viable investment.”
As project costs have risen steeply amid supply chain challenges, inflation and high interest rates, several offshore wind developers in the Atlantic have sought to exit and renegotiate power purchase agreements.
Avangrid was the latest to do so, filing settlements with Connecticut utilities Eversource Energy and United Illuminating to cancel its power purchase agreements for the 804-MW Park City Wind project.
The American Clean Power Association called the NYPSC’s decision “shortsighted” in a Thursday release and said it had “thrown New York’s environmental and clean energy future into peril.”
“Absent a robust offshore wind industry, it will not be possible for New York State to achieve its climate or environmental justice goals,” ACP said.
The New York State Energy Research and Development Authority said in a Thursday statement that it “remains steadfast in [its] commitment to a cost-effective and timely procurement, and development of renewable energy projects on behalf of New Yorkers.”
NYSERDA said it plans to “assess impacts on the contracted portfolio, and with input from the Department of Public Service and the renewable energy industry, proceed swiftly with an accelerated procurement process that prioritizes competition, simplifies bid requirements, [and] incorporates inflation indexing.”