Cape Wind argues for dismissal of lawsuit over its power contract

Cape Wind Associates LLC on Oct. 20 filed a brief in yet another court appeal related to its offshore wind project, telling the U.S. First Circuit Court of Appeals that this lawsuit related to its power sales contract should be dismissed.

This June 9 case involves attempts by the Alliance to Protect Nantucket Sound, the Town of Barnstable, Hyannis Marina Inc. and Jamie Regan to retroactively nullify a bilateral contract that was freely negotiated and voluntarily executed in 2012 by two private parties – NSTAR Electric and Cape Wind Associates – pursuant to Section 83 of a Massachusetts statute commonly known as the Green Communities Act, the Cape Wind brief noted.

“Plaintiffs do not challenge the legality of the Green Communities Act in general or Section 83 in particular,” the project developer added. “Rather, Plaintiffs challenge the actions of the Commonwealth’s Department of Energy Resources (‘DOER’) leading up to a settlement agreement with NSTAR in a proceeding before the Commonwealth’s Department of Public Utilities (‘DPU’) involving NSTAR’s proposal to merge with Northeast Utilities (‘NU’) (the ‘Settlement Agreement’). Among a broad array of topics, the Settlement Agreement included a provision pursuant to which NSTAR would potentially purchase from Cape Wind 27.5%, or up to 129 megawatts (‘MW’), of the output of the Cape Wind Project under a 15-year power-purchase agreement (the ‘PPA’). The Settlement Agreement was independently approved by DPU following adjudicatory proceedings.”

Subsequently, NSTAR, Cape Wind and DOER entered into a Memorandum of Understanding, executed under Section 83, in which Cape Wind and NSTAR agreed to begin bilateral negotiations with the objective of executing a PPA regarding the output from the project. The MOU was approved by DPU in a separate proceeding. Thereafter, NSTAR and Cape Wind completed bilateral negotiations and in March 2012 executed the PPA, with NSTAR agreeing to purchase up to 129 MW of the project’s output. Upon the petition of NSTAR, DPU approved NSTAR’s proposed purchase under the PPA following adjudicatory proceedings, Cape Wind pointed out.

“The fundamental premise of Plaintiffs’ Complaint rests on its allegation that somehow DOER coercively used its ‘influence over NSTAR’s merger request’ to force NSTAR to purchase electricity from Cape Wind. But the Alliance has raised these claims before. Notably, the Alliance participated in both DPU proceedings on the MOU and PPA and argued that DOER forced NSTAR to enter into the PPA. DPU considered the Alliance’s claim of coercion by DOER and squarely rejected it in D.P.U. 12-30, finding that based on NSTAR’s own testimony, NSTAR acted voluntarily in entering into a PPA with Cape Wind.

“Rather than appeal DPU’s final decision approving the PPA to the Supreme Judicial Court of Massachusetts (the ‘SJC’), Plaintiffs waited over 14 months after having let any state appeal rights lapse, to file an action in the District Court asserting violations of: (a) the Supremacy Clause (i.e., that DOER’s negotiation as a party-advocate of the Settlement Agreement with NSTAR invaded the Federal Energy Regulatory Commission’s (‘FERC’) jurisdiction over the setting of wholesale electric prices), and (b) the dormant Commerce Clause (i.e., that DOER’s action as a party-advocate discriminated against out-of-state renewable energy providers). The State Defendants, Cape Wind and NSTAR each filed motions to dismiss the Complaint on multiple grounds, including that: (1) Plaintiffs’ claims are barred by Massachusetts’ sovereign immunity under the Eleventh Amendment to the U.S. Constitution; (2) Plaintiffs lack standing to bring their claims; (3) the court should abstain from hearing the case under the Burford abstention doctrine; and (4) Plaintiffs fail to state a claim under the Supremacy Clause, the dormant Commerce Clause and [federal statute].

“The District Court dismissed the case as barred by the Eleventh Amendment because Plaintiffs were seeking impermissible retrospective relief (to undo DPU’s past, historical approval of the PPA).”

Cape Wind noted that to date, the plaintiffs have brought more than 30 administrative and court challenges against the project, and that Cape Wind has ultimately prevailed in each.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.