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Gov. Deval Patrick, D-Mass., has announced that National Grid and Cape Wind have agreed to enter into negotiations for a long-term power purchase agreement (PPA), under which the utility would purchase the electricity generated by the Cape Wind project.

According to Patrick's office, this PPA is a critical requirement for financing the proposed offshore wind farm in Nantucket Sound, as well as to getting it into construction and operation in time to qualify for federal incentives under the American Recovery and Reinvestment Act, which would reduce the cost of the project by 30%.

The PPA still must go through state regulatory review. National Grid is expected to file shortly with the state Department of Public Utilities (DPU) a memorandum of understanding (MOU) with Cape Wind laying out the rationale for such a contract, as well as the methods and timelines by which the parties will pursue an agreement.

If the DPU approves the process, National Grid and Cape Wind will engage in negotiations to enter into a mutually agreeable long-term contract and submit any final pact to the DPU for review and approval. The state Department of Energy Resources is also a signatory to the MOU, providing a consultative role required by the Green Communities Act of 2008.

SOURCE: Office of Gov. Deval Patrick

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