New London secures host agreement with offshore wind partners
New London — A nearly yearlong stalemate ended on Friday with the signing of a host community agreement between the city and Ørsted and Eversource, the joint venture partners planning to use State Pier in New London as a hub for the offshore wind industry.
Mayor Michael Passero signed an agreement that would secure at least $750,000 per year to the city over a seven-year period, if the project is developed as planned, with provisions for extensions up to 10 years.
The agreement is a compromise from a higher number Passero had pushed for but amounts to a $250,000 a year increase from North East Offshore’s original offer. It contains provisions for an increase in payments, up to $1.5 million per year in years three through seven, linked to the purchase of more offshore wind power by the state. The more wind power the state procures, the more money the city stands to gain — up to $9 million over the course of the agreement if the state hits 1,600 megawatts. Increases in payments are also retroactive.
Passero said the agreement comes closer to remedying historically inadequate compensation to the city from the state for the tax-exempt land.
Danish offshore wind company Ørsted and Utility company Eversource, also known as North East Offshore, entered into an agreement with the state and Connecticut Port Authority in 2020 for $157 million in upgrades at State Pier in support of its planned offshore wind farms.
As a result of the host agreement, Passero said the city no longer plans to stand as an obstacle to the process now underway to secure permits that are crucial to making the transformation of State Pier a reality. The agreement signed on Friday states the two sides are to refrain from making statements or taking action “which may interfere with or harm the interests of the other in connection with the Project.”
Passero has been a vocal critic of the project in light of what he considered a lack of fair compensation to the city for such a massive development. He’s argued for a payment more on par with what tax revenues associated with upgrades at the pier would be, well beyond the $125,000 the city now receives from the state as part of the payment in lieu of taxes, or PILOT, program.
“The city’s objection to the project all along was the property tax revenue the city is losing should be replaced as part of this project,” Passero said. “We’re just thrilled we can get on board now because with the agreement signed today, the residents of New London are being treated fairly and Ørsted and Eversource have provided an equitable share to help toward replacing the lost property taxes.”
Gov. Ned Lamont, in a statement, said the agreement "makes Connecticut’s role as a leader in the offshore wind industry official, with New London now poised to become the premier commercial east coast hub for this sector and our state set to become a leader in the transition to renewable energy and the fight against climate change.”
“This project represents exactly what I have wanted to see at the local level since I came into office — local investment, job growth, development, and a focus on providing for a better environment and future for our state. I am proud to see this agreement come to fruition, and I am especially proud of our private sector partners working with us in the public sector to make this project a reality," he said.
Michael Ausere, vice president of renewable energy business development at Eversource, said the signing was milestone in the Ørsted/Eversource partnership with the city, state, Connecticut Port Authority and port operator Gateway.
“For our offshore wind farms, it’s incredibly important to have reached this agreement. It’s also important for the state of Connecticut. Now, we’re unleashing the full potential of the State Pier and potential of green energy,” he said.
Ausere said State Pier would be used for activities associated with three offshore wind projects: Revolution Wind, South Fork Wind and Sunrise Wind. The seven-year length of the host community agreement aligns with the activities associated with those three projects. Ørsted and Eversource could decide to market the pier to other offshore wind developers once its own activity hits a lull. It has guaranteed a minimum of $250,000 payments in later years of its lease of the pier if it decides to sublease to another offshore wind company.
Connecticut has agreed to buy 304 megawatts through Ørsted/Eversource’s planned Revolution Wind project off the coast of Rhode Island. Ausere said that with the state’s goals of procuring more offshore wind power, there is a good reason to remain confident the state would purchase more power from North East Offshore.
Passero said he still planned to pursue state compensation for lost tax revenues, though the transfer of the State Pier property to the CPA means it no longer is subject to PILOT payments. Continued PILOT payments, however, are the subject of legislative discussions and proposed bills and there has been no indication from the state those payments will immediately end.
As for the state Department of Energy and Environmental Protection permitting process for State Pier, Passero said Friday that the city will remain an intervenor but has no intention of objecting to the plans.
He said he awaits a legal opinion from the state on the status of an existing municipal development plan for the State Pier area, but said the city is willing to work with the state to ensure the MDP does not become a hindrance to obtaining necessary permits.
In addition to the $750,000 per year outlined in the host community agreement, the city is already in line to receive $125,000 a year through the state’s agreement with port operator Gateway and the CPA, which includes a mix of port revenues and compensation for municipal services rendered.
Matt Morrissey, head of U.S. market affairs and strategy for Ørsted Offshore North America, said Friday that because of the planned upgrades at State Pier, New London stands with just a handful of cities to have positioned themselves for additional investments from the offshore wind industry beyond Ørsted and Eversource's commitment.
U.S. Rep. Joe Courtney, D-2nd District, said the signing represents a "long-overdue restructuring of payments to New London that is much fairer to the taxpayers of the city."
“New London is the beating heart of our region’s maritime economy, and this deal will ensure it sees a greater benefit from this project — one that its residents deserve. I also want to applaud the efforts of local legislators to stabilize the (PILOT) program, which is also critical to closing the remaining revenue gap of this tax-exempt parcel,” he said.
David Kooris, chairman of the Connecticut Port Authority, called the signing "just the first tangible sign of the local economic impacts that will result from the Connecticut Port Authority having attracted this marquee user to our soon-to-be-upgraded facility. We look forward to more local benefits as the project comes to fruition.”
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