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Beacon Hill: Don’t Mess With Success on Energy

Posted on July 27, 2018

Massachusetts lawmakers, led by the state House of Representatives, got energy policy right two years ago.

ElectriclinessmallWe now have proof that the landmark 2016 Beacon Hill energy bill requiring competitive procurement of nearly 1,200 megawatts of clean energy is helping the environment without bankrupting the companies and homeowners who pay electric bills.

The New England Clean Energy Connect (NECEC), which won a competitive bid to move zero- carbon hydro power from Hydroquebec over transmission lines built by Avangrid through Maine, is seeking state approval for a 20-year contract with a levelized price (2017 dollars) of 5.9 cents per kilowatt/hour (kWh). In real dollars the price begins at approximately 6.4 cents per kWh in 2023 to slightly more than 10 cents per kWh in 2043.

The average cost is about 8.1 cents per kWh 

That’s surprisingly close to today’s wholesale prices.

But here’s the catch ” none of these encouraging developments would have taken place if the Legislature had increased the so-called Renewable Portfolio Standard (RPS), a step that ironically is being debated now as part of a 2018 energy bill. AIM believes increasing the RPS will impede rather than further the goal to reduce greenhouse gas emissions 80 percent from all sectors by 2050.

The reason is that the RPS does not include large hydro power projects such as NECEC, even though hydro power emits no carbon. RPS-eligible sources consist primarily of onshore and offshore wind and solar. (Offshore wind contracts should be filed shortly with the Massachusetts Department of Public Utilities).

As the RPS mandate increases (along with other energy mandates) hydro power will at some point become ineligible to receive credit in Massachusetts for its clean-energy attributes. Based upon AIM’s analysis of the 2018 energy proposals, hydro power could be out of the energy mix before the end of the proposed 20-year Avangrid contract term and well before the RPS approaches 100 percent.    

The result is that Massachusetts business and residential consumers could end up paying for hydro power they can’t use to comply with clean-energy laws. 

Instead of taking the disruptive step of increasing the RPS, the Legislature should instead enjoy the success of their efforts to create a dynamic energy market in Massachusetts:

  • Massachusetts is moving forward with plans to develop more than 2,800 MW of zero-carbon energy, representing 40 percent of the commonwealth’s electric load at full build.   
  • A new solar program will double the amount of current solar capacity.  
  • There is continued innovation in Massachusetts’ nation-leading energy efficiency program.  
  • New energy storage pilots and rebate programs are rolling out. 
  • New electric and other alternative vehicle programs will tackle the largest source of greenhouse gas emissions ” transportation.  

AIM and its member employers are committed to encouraging clean energy without increasing the RPS.

We urge the administration and the Legislature’s energy conference committee to discuss additional competitive solicitations of clean energy, including offshore wind and hydro power.  Those discussions should include a review the procurement process to ensure it has led to the lowest possible prices for Massachusetts consumers while creating opportunities to grow a new clean energy industry here.