When the breezy dreams of offshore wind giants met the rocky shores of regulation.
In a move that left offshore wind giants like Orsted, Equinor, and BP staggering, New York’s utility regulator has blown away pleas for contract relief.
“Nearly all of New York’s pacesetting 4.3GW of contracted offshore wind capacity is now in limbo following rejection of developers’ pleas for inflation relief by the state’s utility regulator.”
Developers’ Substantial Requests Denied
The developers, caught in the turbulent winds of cost overruns, sought increases to offtake contracts by a staggering 55%. However, the PSC was not swayed by their arguments.
“New York Public Service Commission (PSC) denied petitions by the state’s two offshore wind developers, joint ventures (JVs) of Equinor-BP and Orsted-Eversource, for increases to offtake contracts as high as 55%, which one PSC member reportedly described as ‘breathtaking’.”
Ratepayer Impact: A Central Concern
The PSC stood its ground, prioritizing the interests of ratepayers over the inflation woes of developers. The commission emphasized that the proposed contract increases were not in line with its policy objectives.
“Regulator said cost hikes of up to 55% would have substantial ratepayer impacts and were ‘fundamentally inconsistent’ with commission policy.”
The Uncertain Path Ahead
The decision leaves a significant portion of New York’s offshore wind capacity in a state of uncertainty. The ambitious plans of these offshore developers now seem to be at the mercy of regulatory scrutiny and economic practicality. The future trajectory of these projects remains unclear amidst this regulatory challenge.
Conclusion: Navigating the Regulatory Landscape
The PSC’s decision underscores an interplay of economic considerations and, (finally!) some regulatory prudence in the renewable energy sector. Developers now, perhaps for the first time, face the task of advancing their projects amidst economic fluctuations, having to with regulatory expectations and safeguarding ratepayer interests. We’ll see how many walk away.
HT/david d for sending me official decision below.