The plan to build a natural gas power plant on the Salem waterfront has suffered a major setback.
One month after the operators of the New England power grid ruled that the new Salem plant will be needed in a few years, a state agency has declined to issue an order that the plant owners say they need to get the project financed.
On Friday, the state Department of Public Utilities decided not to ask two public utilities, National Grid and NStar, to consider entering into long-term contracts to buy power from Footprint Power, the new owners of Salem Harbor Station.
That is seen as a significant development for several reasons, principally because the Footprint owners say they need a long-term contract, and the guaranteed revenue that comes with it, to secure financing for the planned 670-megawatt natural gas plant.
In its ruling, the DPU said it would be “premature” to order the utilities to enter into long-term contracts unless it was clear that “the competitive market had failed and that there were imminent (energy) reliability concerns.”
The question now is what this ruling means for the Salem project, which is seen as the catalyst for developing the 65-acre waterfront site.
“It does not kill the project,” said state Rep. John Keenan, D-Salem, a strong Footprint supporter who filed controversial, and ultimately unsuccessful, legislation last year to try to secure that guaranteed financing. “It certainly makes it a lot more difficult, and we’ll have to find a way to get it done ...”
Keenan’s bill, which was called a “sweetheart deal” by opponents, was modified into legislation that gave the DPU the option of seeking long-term contract proposals from NStar and National Grid — an option the agency has now rejected.
Keenan, chairman of the House Committee on Utilities, Telecommunications and Energy, said he plans to meet with DPU officials, Gov. Deval Patrick and others.