Monday, June 21, 2010

Wal-Mart power play

As you read the following, please do not forget that Wal-Mart, sincerely committed as the company executives may be to greening its chain, is still responsible for the demise of hundreds, if not thousands, of small locally-run ("Mom-and-Pop") businesses. They have no qualms about packing up and leaving if profits are not where they feel they should be, oftentimes leaving an economic wasteland in its wake.

They are green because green makes economic sense. There's absolutely nothing wrong with that. However, I would argue that the jury is still out with regard to their long-term commitment to community and overall regional sustainability. (GW)

Wal-Mart takes on Cape Wind

By Patrick Cassidy
Cape Cod Times
June 19, 2010 2:00 AM

The power pact for energy from the proposed Nantucket Sound wind farm has garnered intense scrutiny from environmental groups, renewable energy developers and businesses, including the world's largest retailer.

Wal-Mart, a company that epitomizes the word big, is among the groups questioning the deal between Cape Wind Associates LLC and National Grid. The retailer argues in documents recently submitted to the state Department of Public Utilities that Cape Wind is not cost-effective and that the above-market cost of power from the project would be unfairly distributed to all of National Grid's distribution customers rather than to those customers who buy their power supply from the utility.

Wal-Mart joined 19 other groups that have filed motions to intervene in the state's review of the power purchase agreement announced last month between Cape Wind and National Grid. The DPU held the first of three hearings on the agreement Wednesday night in Bridgewater. The next hearing will be at 6 p.m. Monday at Nantucket High School.

After the public hearings the DPU will hold hearings to take evidence from groups that are permitted to participate in the proceedings.

In their request to intervene Wal-Mart officials argue that the company would be "substantially and specifically affected by the proceeding" because it is a large commercial ratepayer that operates in National Grid's distribution territory. The company has 28 stores in Massachusetts, including locations in East Falmouth and East Wareham.

"We're not opposed to wind energy at all or specifically the Cape Wind project," said Bill Wertz, a spokesman for Wal-Mart, adding that the company's goal is to be totally supplied by renewable energy.

The company does, however, have concerns with how National Grid will pass the additional costs of the power from Cape Wind on to customers, Wertz said.

"Basically, as a starting point, the cost should be borne by those who receive the power," Wertz said.

Wal-Mart buys its supply of power from another company, but it is delivered to most of its Bay State stores by National Grid at a cost of $2 million a year.

"Our point of view is that we would be doubling up," Wertz said. Although other factors go into the cost of the products Wal-Mart sells, increases in overhead costs make it difficult to keep prices low, he said.

The Green Communities Act allows the utility to spread the cost of the contract with Cape Wind across its distribution customers, National Grid spokeswoman Jackie Barry said.

"We believe that it is very sensible and right because the Green Communities Act is all about renewable resources and renewable energy policy that is intended to benefit everybody in the commonwealth," she said.

In its claims, Wal-Mart appears to be betting on low fossil fuel prices in the future and ignoring the cost of renewable energy credits that National Grid would have to buy elsewhere if the utility did not buy them from Cape Wind, Cape Wind spokesman Mark Rodgers said.

About a third of the 20.7 cents per kilowatt hour National Grid will pay for Cape Wind's power is for the energy credits.

"With such a small impact, to take such a high-profile position against the contract of the highest-profile clean energy project in the country kind of runs against all the ways Wal-Mart has been trying to green up its brand," Rodgers said.

For an average residential electricity customer in Massachusetts who uses 618 kilowatt hours per month, Cape Wind's power will cost about $2 extra on each bill, but Cape Wind's opponents have said the effect on businesses will be far greater.

"It's not just a Wal-Mart issue," said Robert Rio, senior vice president at the nonprofit business group Associated Industries of Massachusetts. He said companies like Wal-Mart are working hard to reduce their carbon footprint and shouldn't have to pay twice — first for the power they buy and then again for the excess cost of Cape Wind's power.

"What is the love affair with Cape Wind?" he asked, adding that National Grid should have put its renewable energy power needs out in a competitive bidding process.

"It may be that you run out of renewables and then you have to buy a piece of Cape Wind; that's possible," he said. "But take the cheapest first."

Not all businesses are in line with Rio's group.

The Progressive Business Leaders Network, a group of 100 CEOs and business executives, is strongly in favor of renewable energy projects and Cape Wind in particular, said the group's executive director, Andrew Tarsey.

Although Cape Wind president Jim Gordon is a member of the group, he did not have any say in its position on the project, Tarsey said.

"The first thing is that Cape Wind does not represent itself as a comprehensive regional strategy," he said. "It's one project."

In this way, Tarsey's group agrees with Rio, but Cape Wind does represent a much-needed boost to the state's renewable energy industry, Tarsey said.

"The entire economy needs to be reinvented around a new energy strategy around new economic development models, new kinds of jobs," he said. "Cape Wind is a step in that direction."

Other potential intervenors in the case include the anti-Cape Wind group the Alliance to Protect Nantucket Sound; electric utilities such as NStar; and renewable-energy developers with a stake in how much Cape Wind can get for the power it would produce from 130 turbines it wants to build in the Sound.

The alliance's motion argues, in part, that by buying half the power Cape Wind generates National Grid exceeds requirements of the Green Communities Act that utilities purchase 3 percent of electricity from renewable sources.

Because of this, according to the alliance, the deal should be compared not only to other renewable energy sources but to energy from all sources.

In other arguments, the alliance questions the effects of wind power on the reliability of electricity.

Environmental organizations, including the Conservation Law Foundation, the Union of Concerned Scientists and the Natural Resources Defense Council, argue in their request to participate in the DPU case that Cape Wind is necessary to meet state renewable energy goals that are key to combatting climate change.

A DPU hearing officer must still decide who will be allowed to intervene in the case, and the schedule for hearings to gather evidence will not finalized until after the public hearings, according to agency spokesman Tim Shevlin.


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