May 18, 2021 — Following the recent Vineyard Wind decision, local stakeholders, community leaders, and elected officials penned a letter to Massachusetts Department of Public Utilities Secretary Mark D. Marini regarding the decision making process behind the recently approved offshore wind farm. The letter is included below:

Dear Secretary Marini:

We are a group of public sector, business, and civic leaders in Southeastern Massachusetts who continue to be concerned that the Commonwealth’s approach to procuring offshore wind energy contracts will make it more difficult for our region to reach its full potential as a national leader in the industry. We offer the following comments to the draft RFP and the Initial Comments submitted last week.

The Current RFP Repeats the Mistakes of the Past

We have written previously about the state’s wind energy procurement process, and how it has yielded little in the way of permanent industry investment in Southeastern Massachusetts. As articulated by the Attorney General in her Initial Comments, the current proposed Request for Proposals for Long-Term Contracts for Offshore Wind Energy Projects, despite modest improvements, essentially repeats the mistakes of the first two solicitations. The root of the problem is the Commonwealth’s continued insistence on obscuring the value of economic benefits in the evaluation of project proposals, coupled with its leaving the evaluation of economic benefits entirely in the hands of the state’s utilities. As the developers themselves explicitly noted in their comments to the draft RFP, the net effect again will likely be an award based almost exclusively on price, and the continued capturing of still more industry investment by East Coast states that have been more eager to compete for it.

Our frustration is based on our intensely felt recognition that attracting capital to formerly industrial cities that are not part of a major metropolitan area is inherently difficult. In America’s winner-takes-all economy of the last twenty years, in which so-called “superstar” cities like Boston have pulled in the lion’s share of the country’s investment capital, the offshore wind industry offers a rare opportunity for our region to expand its economic base. With its close proximity to wind energy areas, maritime workforce, and high-functioning port infrastructure, Southeastern Massachusetts is naturally suited to attract a wind industry cluster and the well-paying jobs that would come with it.

Many of us have worked for most of the last decade to cultivate the industry’s interest in our region, and we are proud that our early work laid the foundation for industry’s acceptance across Massachusetts and beyond. Although we are excited that the industry will help to lower America’s carbon emissions, our effort has been primarily about economic development. So it has been troubling for us to witness the establishment of headquarters and regional offices of major wind companies in Boston.

We fear that the DOER’s tweaks of the previous RFP will not meaningfully change the outcome. As the Attorney General notes, “The Proposed RFP’s evaluation protocol, including the failure to disclose the relative value that evaluators will place on each of the Proposed RFP’s required commitments, may result in missed opportunities for the Commonwealth.” See AGO’s Initial Comments at 5-6. We couldn’t agree more, and we fear that the developers, not knowing the actual value assigned to economic benefits, will again submit alternate bids, and the utilities again will select one that is light on investment commitments. Unless the utilities are required to disclose how they will score economic benefits, our region could lose out again.

The Types of Investments That Matter

Nevertheless, we will play our hand. To the extent that the developers will propose investments that purport to deliver “economic benefits” in the upcoming solicitation, we write to make clear our collective views about which types of investments are worthy of credit in the evaluation process, and which are not. As a starting point in the analysis, all of the proposals should be evaluated against the legislature’s primary economic development objective of the Act to Promote Energy Diversity, which was to create a leading industry cluster centered in Southeastern Massachusetts that benefited the entire state. Encouraging commitments to specific long-term investments that lead to the industry’s setting down roots in this region, therefore, is the name of the game.

We also believe that certain long-term commitments should be treated as basic requirements for all bids. Given the potential magnitude of the current procurement, bidders should be expected – at a minimum – to commit to staging their projects and basing their operations and maintenance hubs in Southeastern Massachusetts. We believe that a proposal without such commitments should not be considered credible, and its “economic benefits” score should reflect as much. The same can be said for the Commonwealth’s requirement that bidders submit a “diversity, equity and inclusion plan” for hiring and contracting. The requirement is of course appropriate, but developers and their vendors should not be rewarded for something they should have in place anyway. A commitment to inclusive corporate practices should not be treated as a substitute for long-term, hard dollar investments in places where underserved populations live.

Above these minimum requirements, the scoring of economic benefits should reflect the real differences among investment commitments. In the last two solicitations, the mandatory post hoc review of the process revealed that the evaluations focused on the narrow question of whether the winning project would confer economic benefits to Massachusetts. This binary analysis is inconsistent with the language of the RFP itself, which requires a “relative ranking and scoring of all proposals.” By definition, this means that investment proposals must be compared against one another based on factors that speak to the breadth and permanence of the economic benefits they might confer. Chief among these factors should be the size of the proposed investment, the number and quality of the permanent jobs to be created, and the extent to which it will attract other private capital to the industry cluster. For example, a commitment to open a turbine factory would score highly in all of these dimensions, whereas the creation of an industry internship program for high school students, though laudable, would not.

The most quantifiable long-term investments are those in which a specific dollar amount is committed, such as hard dollar commitments to construct or upgrade port infrastructure or to award grants for business accelerators or applied research. Comparing the amounts committed to such investments by each bidder is relatively straightforward, that is, in general, the larger the funding commitment, the higher the score. But like any proposed investment, the proposals must be evaluated based on their projected returns. The devil may be in the details, as the full return on any given investment may not be fully realized for many years, and the return may not be readily characterized in monetary terms. For this reason, the bidders should bear the burden of demonstrating how their proposed investments would create permanent, well-paying jobs, add to the local tax base, attract other investment, and otherwise help to build an industry cluster.

It should be noted that some long-term commitments may have little or no discernable impact on the price to be offered to rate payers. For instance, a commitment to train O & M technicians over the life of the project at a training institution in our region would not necessarily demand more from ratepayers, but might confer significant benefits. The technicians after all must be trained somewhere. The same logic applies to the permanent siting of business facilities in our region. After two rounds of solicitations, none of the wind developers or their vendors have set up permanent business sites in our region, while all of the developers and several major OEM’s have established their front offices in Boston. If state government is truly committed to supporting the efforts of every region of Massachusetts to lift itself up, it should not allow our region to be treated as a mere service dock for offshore wind companies based in Boston. In our view, the degree of commitment to establish permanent private sector enterprises, the number and quality of the jobs associated with them, and their ability to attract follow-on investment, should be the yard stick on which proposals should be ranked

Finally, the evaluation of the investment proposals cannot be left exclusively to the utilities, which are not in the business of cultivating economic development, and do not have a lens into the types of commitments that really matter. We have made this argument before, and we note that the climate legislation enacted just last week establishes a formal role for the Executive Secretary of Housing and Economic Development in reviewing bid submissions, reflecting the legislature’s reservations about the utilities’ ability to fairly evaluate investment commitments.

We urge the administration to adopt this requirement as part of the procurement process – regardless of whether the new legislation applies to the current RFP. The Secretary of HED’s scoring should reflect the real differences among proposals, as outlined above. It also should be binding on the overall evaluation, as opposed to being mere advisory. After the award is announced, the Secretary’s evaluations should be made public. Anything less would fall short of what the legislature intended, and further undermine the Commonwealth’s ability to attract investment.

We in Massachusetts have a short window to capture industry investment, and the stakes are highest in our region. Securing long term industry investments in this next solicitation is critical to making that happen. Thank you for your consideration.

Read the full letter here