) subsidiary NSTAR has entered into a 15-year purchase power
agreement ("PPA") with Cape Wind Associates LLC ("Cape Wind").
Both parties have already received approvals from the
Massachusetts Department of Public Utilities ("(DPU").
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Per the agreement, NSTAR will buy 129 megawatts or 27.5% of Cape
Wind's total energy, capacity and renewable energy credits. In
the first year of the contract, NSTAR will pay 18.7 cents per
kilowatt-hour ("kWh") to Cape Wind. Subsequently, the cost can go
up to 3.5% annually under the contract.
This agreement may impose extra bill burden to Northeast's
household and business clients. The company expects its electric
customer's average monthly bill to rise by approximately $1.16.
In August 2005, the U.S Environmental Protection Agency ("EPA")
rolled out a regulation that each of the federal agencies will
consume renewable energy in amounts of not less than 7.5% in 2013
and afterward. Currently, most of the electricity in
Massachusetts are produced by using fossil fuels like natural
gas, oil, and coal. To follow these environment-related mandates,
the state and local authorities, and utility companies invest
substantial amounts for its renewable carbon-free resources to
meet the environmental regulations. Particularly, this effort
will enable Northeast to supply cleaner utility to its customers
at a cheaper price in the present volatile fossil fuel price
We know that Cape Wind is in the middle of its $2.6 billion
project and has fund requirements to complete this project. Prior
to this PPA, the company signed a similar type of contract in
November 2010 with
National Grid plc
) to buy half of Cape Wind's power. We believe these two
contracts ensured Cape Wind a steady stream to its future project
For the last couple of years, Northeast continues to expand its
alternate energy profile, not limiting itself to wind assets. The
company also intends to introduce solar and hydro energy for its
customers. We appreciate Northeast's effort toward strengthening
its renewable energy portfolio, which subsequently will enable
the company to supply emission-free utility to its customers.
Hartford, Connecticut and Boston, Massachusetts-based Northeast
Utilities provides energy delivery services to residential,
commercial and industrial customers in Connecticut, New Hampshire
and Massachusetts. With a market capitalization of $11.96
billion, the company has 6,063 full time employees and currently
has short-term Zacks #3 Rank (Hold rating).