After passing the Massachusetts House and Senate with overwhelming support, in July 2008 Governor Patrick signed the Green Communities Act, a comprehensive, landmark energy bill that set the Commonwealth on path to be more efficient, more diverse, and less polluting while creating more jobs in Massachusetts.
A Record of Success
The Green Communities Act is already working. It is creating new jobs, driving down the costs of clean energy, and leading to a more sustainable, predictable and productive regional economy. Energy bills and rates have dropped or stabilized; the clean energy sector has grown to over 64,000 workers and nearly 5,000 firms. The sector grew by an impressive 6.7% in 2010 compared to a little over 1% for the rest of the state’s economy. Because of the efficiency investments made possible by GCA, Massachusetts was ranked # 1 in energy efficiency
in the nation in 2011, overtaking California for the first time.
Despite this impressive record of success, several small but influential groups are attacking the bill because they claim that the cost to ratepayers is too high. The State’s Attorney General, Martha Coakley, and others suggested changes to the bill that would significantly reduce the state’s ability to generate local renewable energy and endanger the outstanding progress made on energy efficiency.
E2, together with the New England Clean Energy Council and other groups, is working to respond to these attacks. Attacks Focus on Costs but Ignore Benefits
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The Executive Office of Housing and Economic Development and the Executive Office of Energy and Environmental Affairs completed an exhaustive report on the costs and benefits of the GCA
. It concluded that at $2.5 billion, the benefits expected to accrue to electric customers are nearly two and half times greater than $1.1 billion cost of implementing these initiatives — representing a prudent investment for ratepayers and the Commonwealth. In terms of utility bills, the lifetime benefits of each year’s program activities can also be described as $0.028 per kWh for 2010, increasing to $0.048 for 2015, while the costs are well less than half of those amounts — $0.010 per kWh for 2010 and $0.021 for 2015.
Nevertheless, the Attorney General stated
that “the costs of the GCA programs are projected to be in excess of $4 billion over the next 4 years and will cause the total delivered cost of electricity to rise an estimated 1 to 2 cents per kilowatt hour or 7 percent over the next 4 years.”
These numbers are based on data from the very same report referenced above. However, the Attorney General’s statements solely used cost data and did not include the projected benefits of the GCA that are clearly stated in the report. While an average 700-kilowatt per month customer might pay an additional $0.011 per kilowatt-hour or $7 per month in 2015, that increase would be offset by benefits that are worth double that amount or $14 per month. Massachusetts Residential Rates and Bills Are Trending Down
High-energy costs are nothing new for New England, for the simple reason that our region has no oil, coal, or natural gas of our own. Nonetheless, over the last few years, Massachusetts’ energy costs have declined, with the Commonwealth becoming more competitive compared to other New England and Mid-Atlantic states.
In the three years since the Green Communities Act was passed, the average Massachusetts consumer has seen a decrease in both residential rates and monthly bills, according to data from the Energy Information Administration. As Massachusetts has become more energy efficient, through efforts like those dramatically expanded by the Green Communities Act, the average residential electric bill has dropped relative to other states. Massachusetts’ average monthly bill dropped from $109 in 2008, when 33 states had lower household bills, to $97 in 2010, with only 20 states having lower bills.
Moreover, average rates have also declined from 17.7 cents per kilowatt-hour in 2008 to 14.6 cents in 2010. In 2008, Massachusetts had the 4th highest residential rate in the nation, while in 2010 we were down to 11th. Opponents’ Proposal Would Devastate Homegrown Renewables
The bill’s opponents focused many of their attacks on the renewable energy portion of the bill. They advocate for renewable energy contracts that are competitively bid and awarded to the “least cost” option on a ‘technology neutral’ basis.
While this sounds reasonable on the surface, peeling back the actual impact shows that this would have a devastating effect on the state’s homegrown renewable industry. It would dramatically reduce future renewable energy options and would not be in the Commonwealth’s or ratepayer’s best interest.
The real issue is a fundamental difference between the “least cost” and “cost-effective”. The GCA now requires a showing that any long-term purchase is "cost-effective," a statutory standard that considers all costs and benefits, including costs and benefits of complying with existing and anticipated future federal and state environmental requirements as well as four factors identified in the law: price, contribution to system reliability, contribution to serving customers at peak periods, and job creation. A "least cost" proposal would prohibit any consideration of these important attributes.
If the only criteria were today’s lowest price of generation, the winners would invariably be out of state projects that would send our money and potential jobs out of state, since Canada’s hydro and Maine’s wind power provide today’s lowest cost renewable energy. One other important impact of the proposed changes would be to eliminate Cape Wind, the State’s landmark off shore wind project that has been in development for over 10 years and recently passed all of its environmental hurdles. Some speculate that this is the real agenda of the bill’s opponents.
A “technology neutral” approach would have extremely negative impacts on emerging segments of the local renewable industry, essentially eliminating a wide range of renewable options such as solar power, geothermal, fuel cells, anaerobic digestion and a vast array of other technologies that are currently under development -- and limit our state’s ability to diversify its energy sources.
Since no one can predict which of the many renewable technologies in today’s pipeline will be the most cost-effective over the long run, the approach advocated by opponents would lock the state into a short term low cost option that will have unforeseen higher costs in the future - much like a sub-prime balloon mortgage.
Homegrown renewable energy provides long-term price stability by creating a broad portfolio of local energy resources as a hedge against volatile fossil fuel prices and increasing reliability of the system. Moreover, the revenues generated by local renewables stay here in Massachusetts and are recycled into our local economy providing a much needed multiplier effect.
With cleantech forecasted to be a $5-10 trillion global industry in the coming years, Massachusetts needs to encourage the growth of many different sectors of the cleantech industry to enable and encourage future global market leaders to locate their facilities here in the Commonwealth.
Massachusetts has built a world-class clean energy cluster over the past few years. Based on its unique strengths in cleantech innovation, university, entrepreneurial, and financial communities have combined in recent years to make Massachusetts second only to California in cleantech startups, venture capital, jobs, and overall growth of its clean energy innovation clusters.
But any new industry cannot just consist of innovation. There needs to be the ability to implement and sell the technology locally in order for the innovation to flourish. Just as the biotech and medical device industry has many ready customers here in Massachusetts, our renewable energy companies also require a local market for their products. We Need Your Help!
Watch for additional updates early in the New Year on ways to show support and contact E2 Director Berl Hartman at email@example.com
if you have additional insights and/or key relationships to leverage.
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