This story has been updated.
The Connecticut Port Authority announced Tuesday 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 $300 million.
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.
They said another $23 million will be provided by Eversource and Ørsted, the two energy companies that partnered with the state to rebuild the maritime facility.
David Kooris, chairman of the Port Authority, said the agency is also requesting an additional $6 million in contingency funding from the state bond commission to potentially cover future cost overruns.
The price increases mean that the port facility will cost more than three times the initial estimates.
Eversource and Ørsted, which previously committed roughly $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 that is 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 statement.
Ulysses Hammond, the interim director of the Port Authority, said the new price tag for the project is the result of months of negotiation between the agency and its primary contactor, Kiewit. And he said 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,” he said.
This is not the first time the State Pier project’s budget has ballooned substantially.
When officials launched the project in 2019, state officials claimed the redevelopment effort would cost roughly $93 million. Since then, the Port Authority has repeatedly revised the overall cost, including last May when the budget was increased to roughly $255 million.
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 the state’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, issued a statement earlier this year that called on the state’s private partners to help cover the ongoing cost increases for the project.
On Tuesday, 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 the companies the ability to recoup the money they are contributing to help finish the construction project.
Port Authority officials said Eversource and Ørsted will have the opportunity to recover their $23 million investment by subleasing the State Pier to other companies when they are not using the facility.
The deal allows the two energy companies to recoup their money through any subleases that they help to negotiate. The businesses would get 90 percent of that sublease revenue until their $23 million investment is paid back.
Under the earlier agreements, the state was supposed to receive roughly 80% of the sublease revenue from the State Pier, with the private companies netting the other 20%.
Not everyone in state government was as pleased with those terms and the overall price tag for the project.
Rep. Holly Cheeseman, a Republican who serves on the State Bond Commission, said she and other lawmakers were briefed on the overall price and cost-sharing arrangement on Tuesday morning. And she said most of her colleagues had sticker shock from the ballooning price of construction.
“The reaction throughout the delegation was shock and horror,” Cheeseman said.
Cheeseman said she found it “egregious” that the Port Authority gave Eversource and Ørsted the authority to recover their money by collecting sublease revenue ahead of the state, which will own the port facility.
She is also concerned about the long-term prospects of the offshore wind industry. Several companies who are developing areas in the Atlantic have reported recently that the cost of building offshore wind farms has increased dramatically due to material costs and higher interest rates.
With Connecticut set to invest over $200 million in taxpayer money to retrofit the State Pier, Cheeseman said she is worried about whether the investment will pay off.
“Given the amount the state is committing, it is a concern,” she said.
Kooris, the Port Authority’s chairman, does not share those concerns. He told the CT Mirror Tuesday that he believes there will be several offshore wind developers lining up to utilize the New London State Pier when it it is completed at the end of this year.
Eversource, which operates Connecticut’s largest electric utility, is unlikely to be among those companies, however.
Eversource is in the process of selling off its offshore wind assets and getting out of the business of developing offshore wind farms altogether.
The company revealed last week that it intends to sell its interest in several undeveloped areas in the Atlantic and its stake in the New London State Pier to Ørsted, its partner.
Eversource executives also said the company is getting close to selling off several other offshore wind projects that are already under development or in the early planning stages.