The Massachusetts’ Senate is considering an energy bill with several potential positive features: a requirement for utilities to purchase more of their renewable energy via long-term contracts; an increase in the minimum term of those contracts; a lower tax burden on solar installations; and a study of the potential benefits of a Clean Energy Performance Standard. Over 50 amendments to the bill, S. 2200, were filed and considered on the Senate floor on March 29. The bill will be up for debate again on April 5. Together with H. 1776, which expands “net-metering” programs that allow small-scale renewable energy generating facilities to receive credit for the electricity they generate, the bill has the potential to remove barriers to the expansion of the Massachusetts’ clean energy sector.
Proposals from powerful opponents that would have significantly weakened the Green Communities Act were not included in the Energy Committee draft but several were brought up as amendments for the full Senate to consider. E2 is working together with a GCA coalition of business, environmental, health and labor organizations to convince lawmakers that including large existing hydro or energy efficiency in the Renewable Portfolio Standard (RPS) or making lowest cost the only criteria for competitive bids on renewables, would negatively affect the State’s clean energy sector, the economy and ratepayers and would not improve the State’s capacity to meet its renewable objectives.
Qualified improvements for renewables
The bill under consideration removes some barriers to renewable energy that could impair growth in this emerging sector. For example, the draft bill expands the long-term renewable energy contracting program by an additional 4% to bring it to a total of 7%. Long-term contracts reduce project financing costs for developers and thereby reduce costs for customers. E2 and the GCA coalition would have liked the bill to go further by adding a second step increase of 2 to 3% in future years to keep pace with growing RPS goals.
In addition, the draft bill extends the minimum term of these contracts to 10 to 20 years (from 10 to 15 years). Though a step in the right direction, we advocated for a longer minimum period of 20 to 25 years, a more typical term for renewable energy project financing. As part of the long-term contracting provision, the bill under consideration adopted a suggestion from the coalition to establish tranches or categories within which small, emerging or diverse projects can compete with each other, providing an opportunity for emerging technologies to compete fairly and provide the fuel diversity and economic development benefits they bring to Massachusetts.
For solar developers and municipalities, the bill addresses a persistent source of confusion by updating the current exemption from property taxes for solar energy facilities. The bill clarifies that certain types of projects (those that serve the energy needs of host municipalities and those that primarily supply the energy needs of the facilities on which they are located) are exempt from local property taxes. For projects that are not categorically exempt, it provides developers with a simple formula to calculate a payment in lieu of taxes to the town or municipality to gain an exemption.
Another positive proposal that E2 and the coalition supported is the section of the bill that calls for a study of the potential benefits, and appropriate design, of a Clean Energy Performance Standard encompassing low- and zero-emissions technologies and programs outside of the RPS and the energy efficiency programs.
The bill also increases the level of net metering from an overall level of 3% for both independent distribution companies and municipal utilities and adds anaerobic digestion to the list of technologies that qualify for net-metering.
Central procurement proposal needs more study
One proposal that emerged at the 11th hour provides for central procurement of renewables and transmission resources if an annual independent study showed that the state would fall short of its Class I renewable portfolio goals. E2 and the GCA coalition believe that while the goals of the proposal are laudable, the current version could have unintended consequences such as reducing the state's potential for homegrown renewable energy. Since this proposal has not been fully vetted and has never been debated in a public hearing, we believe that there are too many unanswered questions to move forward at this time. The coalition is proposing that the issue be formally studied by the Department of Energy Resources (DOER) rather than enacted in haste.
Some moves in the wrong direction
Though we are happy to see that the worst of the proposed changes were not adopted, there are still some troubling provisions in the bill. For example, one section could undermine Massachusetts’ highly successful energy efficiency programs. It would allow five of the largest commercial and industrial (C&I) electric and gas customers in each utility service territory to “opt out” and pursue an “accelerated rebate program.” This would draw funds away from the proven, successful programs carried out by the utilities and create inequities between different classes of customers. It would also reduce the state’s capacity to leverage efficiency program dollars via economies of scale to maximize reductions in energy waste and customer savings.
Another section would prohibit use of energy efficiency program resources to support compliance with federal or state building or energy codes. Because the language is ambiguous, we are concerned that this section may create confusion and have a chilling effect on communities that have adopted building “stretch codes” that go well beyond the standards for efficiency as part of meeting the GCA’s requirements for green communities. We are pushing to ensure that those programs will still qualify for funding.
E2 helps brings the message to Beacon Hill
E2 played an active role in helping to bring the message to key legislators that the Green Communities Act was working and that their first obligation was to “do no harm” while still making targeted improvements. Through numerous meetings, testifying at hearings, and a letter
that was hand delivered to every member of the state senate and house energy committees, E2 made the economic case for improving the Green Communities Act by removing barriers to clean energy.
On March 8th, E2 members Berl Hartman, John Harper and Dan Goldman spoke at a Massachusetts’ Statehouse hearing on the bill and made the case that increasing the percentage of long-term contracts would help developers get renewable energy financing, reduce the cost to ratepayers and help the state’s growing clean energy cluster.
E2, along with other members of the GCA coalition, also proposed that the criteria for such contracts should be “cost-effective” rather than “least-cost” pointing out that renewable energy projects are not commodities that are interchangeable and lowest cost does not necessarily provide the best return on investment. A least-cost approach would allow resources far from Massachusetts to satisfy most, if not all, of the RPS requirement and would ignore important non-price attributes such as locational benefits and contributions to electric system reliability. Moreover, it would limit electricity supply diversity from resources such as solar power, offshore wind, geothermal, fuel cells, anaerobic digestion as well as an array of innovative technologies entering the market. We are pleased that the bill as currently drafted adopts the “cost-effective” criteria rather than “lease-cost.”
The bill is still most definitely a work in progress and it remains to be seen how several key amendments will fair over the coming weeks. Further amendments are scheduled to be debated on the floor of the Senate on April 5 and it is unclear what action, if any, the House will take.
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