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Connecticut Port Authority Wants Help to Pay for State Pier's Cost Overruns

Wed June 07, 2023 - Northeast Edition
Hartford Courant

Three offshore wind projects commissioned by Connecticut, New York and Rhode Island — a total of approximately 160 turbines, with an output of 1,760 MW (enough to power over 1 million homes) — are scheduled for assembly and delivery from New London. (Connecticut Port Authority photo)
Three offshore wind projects commissioned by Connecticut, New York and Rhode Island — a total of approximately 160 turbines, with an output of 1,760 MW (enough to power over 1 million homes) — are scheduled for assembly and delivery from New London. (Connecticut Port Authority photo)

The Connecticut Port Authority announced May 29 that the cost of redeveloping the New London State Pier into a launching point for offshore wind turbines has skyrocketed by more than $47 million, driving the overall price to more than three times the original estimate for the project.

The Hartford Courant learned that officials with the Port Authority said during a board meeting that they will ask the State Bond Commission, which is chaired by Gov. Ned Lamont, to borrow more than $23 million through public bonds to pay for the ongoing cost overruns.

Another $23 million will be provided by Eversource and Ørsted, the two energy companies that partnered with the state to rebuild the maritime facility, according to the authority.

David Kooris, the agency's chair, said it is also requesting an added $6 million in contingency funding from the state bond commission to potentially cover future cost overruns.

The Hartford newspaper reported that Eversource and Ørsted, which previously committed approximat $75 million to the pier project, said they are focused on finishing the project and transforming the State Pier into a "state-of-the-art" facility capable of handling a range of cargo, including wind turbines.

"We remain committed to the State Pier redevelopment project and its successful, uninterrupted completion," the companies said in a joint statement.

Ulysses Hammond, the interim director of the Port Authority, told the Courant that the new price tag for the project is the result of months of negotiation between his agency and Kiewit, its primary contractor. He explained that the haggling over the cost-sharing arrangement between the Port Authority and Eversource and Ørsted was extensive.

"Those negotiations have been long and exhaustive, and we endeavored to make sure we reached a fair price," Hammond noted.

State Pier Project's Budget Continues to Increase

This is not the first time the State Pier project's budget has ballooned substantially.

When officials launched the construction effort in 2019, Connecticut officials claimed the redevelopment would cost about $93 million. Since then, the Port Authority has repeatedly revised the overall cost, including last May when the budget was increased to $255 million, according to the Hartford news outlet.

At that time, Kooris assured members of the state bond commission that the Port Authority would not seek any additional taxpayer money for the redevelopment, which is considered one of the largest maritime projects in Connecticut's history.

It became apparent in the following months, however, that it was unlikely Kooris would be able to keep that promise.

There were signs the Port Authority was in a difficult financial position as early as last fall, as construction crews continued to encounter problems at the site, including issues that prevented workers from driving steel pilings into the ground.

Hammond officially announced last December that the Port Authority was, once again, renegotiating the agreements that dictated the overall price of the project and the cost sharing arrangement between the state and its private partners.

Lamont, who is in his second term as governor, issued a statement earlier this year that called on the state's private partners to help cover the ongoing cost increases for the project.

In late May, the governor's office praised the deal for meeting that demand.

"The State Pier Project will transform the New London region and all of Connecticut, supporting quality jobs and clean energy goals," said Adam Joseph, Lamont's spokesperson. "The administration is thankful that our partners Ørsted and Eversource are making a significant investment to help complete this project."

But the amended contract with Eversource and Ørsted also gives them the ability to recoup the money they are contributing to help finish the construction project. Port Authority officials said they will have the opportunity to recover their $23 million investment through any subleases that they help to negotiate to other companies when they are not using the facility. The two businesses would get 90 percent of that sublease revenue until their investment is paid back.

Under the earlier agreements, the state was supposed to receive roughly 80 percent of the sublease revenue from the State Pier, with the private companies netting the other 20 percent.

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