NEW LONDON – Connecticut Port Authority officials said they would ask state lawmakers to approve another $30 million in borrowing, which they hope will be enough to complete the redevelopment of the New London State Pier as an offshore wind hub.
Port Authority Chair David Kooris and Executive Director Ulysses Hammond said the state funds, combined with another $23.75 million in contributions from the offshore wind partnership of Eversource and Ørsted, would bring the total funding for the project to $309.25 million – including $98.75 million from the two companies and the rest from the state.
With the cost of the project currently projected at $302.75 million, the $30 million in bond funds the Port Authority is asking for will leave a $6.5 million contingency. Both Hammond and Kooris said they were comfortable that would be enough to avoid asking for any more money.
“Ulysses and I have asked our construction administrator that question many, many times, and they have conveyed they are confident that is an adequate owner’s contingency, given how little risk remains at this stage of the project,” Kooris told CT Examiner.
While the price of almost all of the project is set, there are still three line items left unsettled because they involve pile-driving where construction crews could encounter more obstructions, Hammond said.
The amended contract between the Port Authority and the partnership of Eversource and Ørsted also includes a provision for the companies to earn back the additional $23.75 million they agreed to contribute.
The companies are leasing the port for 10 years, with an option for another seven years, to stage the heavy turbine components for three permitted offshore wind projects. Kooris said there could be a “down period” after their third project, Sunrise Wind, is constructed, where the companies could sublease the port to another company.
If they decide to sublease the port, the proceeds would first go toward paying them back for their $2 million yearly rent during the time they aren’t using it. Then, most of the money from the sublease would go toward paying them back for the $23.75 million contribution, Kooris said.
The companies aren’t guaranteed to make that money back if they don’t sublease the pier, Kooris said. But if they make all their money back, then any sublease after that would go toward paying the Port Authority for the $30 million in additional state funding. After that, any sublease revenues would be split 80 percent to the Port Authority and 20 percent to the companies, Kooris said.
“[The $30 million] theoretically could fund other port projects, so we wouldn’t need to go to future bond funding,” Kooris told CT Examiner. “Sort of like the bond funding we’ve received becomes a kind of revolving fund negating the need for future bond revenue.”
Kooris said they could sublease the port out to any company, but likely only offshore wind companies would be interested at the price they would be charging. He said that in the short term, with a glut of offshore wind projects and only two ports in New England with the heavy-lift capabilities to stage turbines, he expects they would be “well positioned” to sublease the port if they want to.
Announced in 2019 as a $93 million project, a series of updated estimates, delays and rising costs continued to raise the price tag in the ensuing years.
Last year, with the project pegged at $255.5 million, Kooris asked state lawmakers for another $20 million, bringing the state’s contribution to $180.5 million. He promised it would be the last time he asked for money from the state to finish the project, but by October it was clear the cost of the project would rise again.
Calling out the history of escalating costs, frequent Port Authority critic Kevin Blacker told the Port Authority board at its meeting that “it doesn’t matter” what they said the final cost of the project will be, because nobody would believe them at this point.
“You’ve been wrong so many times. You’ve lied so many times,” Blacker said. “You told us it was going to be completed in 2022, then 2023, now 2024. Anybody that believes you at this point or gives any weight to what you say today, is an idiot.”
Since last fall, the Port Authority, Eversource and Ørsted have been quiet about the costs, declining to provide details as they negotiated behind the scenes on a new price with a higher contribution from the companies.
Hammond said those negotiations didn’t finish until May 24. Hammond said part of the reason they took so long was because the groups were pushing for lower prices, saying they were “very hard on our construction administrator about price.” Kooris said the negotiations came down to Eversource and Ørsted wanting more certainty before agreeing to offer more money.
“We knew we were going to need a significant cost share from [Eversource and Ørsted], and to get them to make an additional contribution, we needed schedule certainty, and as much price certainty as we could get,” Kooris told CT Examiner. “We’re very comfortable with the schedule at this point, and narrowing the cost certainty to those three items allowed us to get there.”
At the same time, Eversource and Ørsted were negotiating a different deal – Eversource selling its stake in their jointly owned offshore wind leasing areas off the coast of Massachusetts to its partner.
Eversource said it expects to write off about $220 million to $280 million in lost value of those assets from the sale of the lease areas, onshore facilities like the lease in State Pier, and its stake in their three offshore wind projects – which Eversource said it expects to announce in June. Eversource declined to say whether the projects would also be sold to Ørsted, and did not respond when asked to clarify whether they expected to sell the assets as a loss.
Kooris said the Port Authority knew Eversource was selling its stake in the offshore wind projects, including the New London State Pier, since the company publicly announced it was exploring the option last year.
But he said it had no bearing on the projects or negotiations for a final price. And it doesn’t change anything from the Port Authority’s perspective, he said; lease payments will just come from Ørsted instead of both companies.
If anything, Kooris said, Ørsted buying out Eversource’s stake is a positive for the Port Authority, given that it keeps another wind company from buying into the partnership and using it as a backdoor into the State Pier lease.
The first of two delivery berths being reconstructed at the pier, including a platform capable of handling 5,000 pounds per square foot, was completed in March and welcomed its first ship earlier in May.
Components for offshore wind turbines are expected in June, to be assembled on the pier and brought to the 132 MW South Fork Wind project Eversource and Ørsted are building off the coast of Long Island.
In a statement, Eversource and Ørsted said their partnership remains committed to redeveloping State Pier into a state-of-the-art terminal capable of serving a range of industries, and its “successful, uninterrupted completion.” They said their contribution brings their total investment in the pier up to $120 million, including $20 million in expected lease payments.
“Connecticut is already benefiting from the construction jobs associated with the redevelopment project, and more are expected in the coming months,” the companies said in a statement. “When complete, the Port of New London will put Connecticut back on the map as the epicenter of the region’s maritime economy.”