New London Wins 10-Year Commitment For Northeast Offshore Deal on State Pier

Block Island Wind Farm (Credit: CT Examiner)


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HARTFORD — State officials announced today the signing of a Host City Agreement between New London and a joint venture of Ørsted and Eversource that includes a 10-year commitment paying the city an average of at least $1 million each year during offshore wind operations at State Pier.

“Today’s 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,” Gov. Ned Lamont said. “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.”

New London Mayor Michael Passero, whose dogged advocacy has at times called into question the possibility of a deal, praised the agreement.

“The city has worked tirelessly to reach an agreement that benefits the taxpayers of New London as the host city for the State Pier’s use for offshore wind development,” said Passero in a statement. “It is exciting for the city to partner with the stat on its commitment to increasing clean renewable energy for Connecticut residents, and we look forward to economic growth opportunities for New London and the region as the offshore wind industry continues to grow. I would like to thank Governor Lamont for his leadership on this important project, and for his commitment to New London and Southeast Connecticut.”

The long-awaited agreement includes the potential for $250,000 to $750,000 each year in additional funding for New London if the joint venture, called Northeast Offshore or NEO, meets specific energy thresholds with the state.

For each of the first seven years, from 2022 to 2028, Northeast Offshore has agreed to pay the city $750,000 — a number significantly greater than the two-year “voluntary” annual contribution of $750,000 offered by the venture during a public rollout of the plan in New London on Sept. 19, 2019.

Beginning in 2024, NEO will also pay the city for power purchase agreements awarded from the state. The fee structure includes an annual payment to the city of $250,000, $500,000 or $750,000 for power purchase agreement awards totaling 800 megawatts, 1,200 megawatts and 1,600 megawatts respectively. 

In addition, the Connecticut Port Authority will pay the city an annual minimum revenue sharing fee of $50,000 from 2019 to 2023, that will increase to $69,000 from 2024 to 2028. The port authority will also pay an annual incremental revenue sharing fee projected to total between $62,000 and $109,000 each year from 2022 to 2028. 

Gateway Terminal, the port operator as of May 2, 2019, will also pay the city an annual fee, beginning retroactively in 2019, of $75,000 each year, a fear that increases by 2 percent each year to $89,632 in 2028.

The agreement is in addition to a payment in lieu of taxes from the State of Connecticut reimbursing the city for the tax exempt property, said Kosta Diamantis, the deputy secretary of the state. Those funds were previously estimated at $125,000 each year, but Diamantis said the amount could vary over the 10-year deal. 

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This story has been updated to includes quotes by Gov. Ned Lamont and Mayor Michael Passero.