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State Energy Policy Built on Ineffective Programs that Drive Up Costs

Posted on December 2, 2011

Editor’s note – AIM Senior Vice President Robert Rio wrote an article in this space Monday about the fact that a rare political consensus is developing on Beacon Hill around the need to address the staggering cost of electricity in Massachusetts.

Rio’s article was later posted by Commonwealth magazine, where it drew a response from Lisa Capone, Assistant Secretary for Communications and Public Affairs at the Massachusetts Executive Office of Energy and Environmental Affairs. Rio’s subsequent article appears below.

Electricity CostsAIM appreciates substantive debate on issues as important as the high cost of energy in Massachusetts. But the recent posting in Commonwealth magazine by Assistant Secretary Lisa Capone is disappointing in its grasp of the issues.

Ms. Capone attempts to rebut arguments that AIM never made in its November 28 article Consensus Emerges on Need to Address Massachusetts Electricity Costs. Her ad hominem representation of AIM’s position on numerous issues is false. And the “facts” she cites are either incorrect or verify our initial points.

Ms. Capone spends an inordinate amount of time accusing AIM of flip-flopping in our support for energy efficiency. The only problem is that the November 28 AIM article was not about energy efficiency, but about state-mandated programs of questionable benefit diverting money out of the productive economy.

For the record, AIM has been clear and consistent in its support of energy efficiency.  We stated in our recent testimony before the Joint Committee on Telecommunications, Utilities and Energy, that we support a vibrant, cost-effective energy efficiency program.  We may debate the actual monetary benefit of energy efficiency versus its cost, but all energy should be used wisely and we are proud to be a leader in supporting cost-effective energy efficiency programs.

While efficiency measures create measurable results, the same cannot be said of other programs developed under the Massachusetts Green Communities Act, including net metering, long-term contracts for renewable energy, smart grid, additional RPS categories, utility owned solar and solar carve outs. These programs are either of questionable benefit or run so inefficiently and without any accountability or review that their added costs will wipe out any benefit from energy savings.

These are the programs that contribute unnecessarily to the $4 billion of additional costs that Attorney General Martha Coakley, the statutory ratepayer advocate, cited in testimony on Beacon Hill. The Massachusetts Division of Energy Resources (DOER) does not dispute the attorney general’s numbers.

AIM supports cost-effective, competitively bid renewable projects and other programs that demonstrate real results at the least cost to ratepayers. 

Ms. Capone’s claims about impressive job gains in the so called “clean-energy sector” – a rhetorical sleight of hand suggesting that industries that don’t fit the administration’s political agenda are somehow “unclean” – prove AIM’s point about the problem of government picking winners and losers. Could it possibly be that the anemic growth in the so called non-clean energy sector cited by Ms. Capone is partly due to the imposition of more than $1 billion worth of electricity cost increases under Green Communities in order to transfer it to favored sectors of the economy?   Clean-energy jobs are not being created – just transferred.

Massachusetts deserves an energy policy that treats all ratepayers and companies equally. A diverse economy is more sustainable than one based on government-imposed cross subsidies. 

Massachusetts has the highest electricity prices in the nation, almost double the average rate for industrial users, despite the promises that these programs reduce rates. Even a recent 40 percent decline of the cost of natural gas, a key fuel for electricity generation, failed to lower electric rates in Massachusetts. The only way to address the problem is through rigorous, cost-effective, transparent and competitively bid projects and policies that put the consumer first.

 These standards benefit all members of the Massachusetts economy. They will bring jobs to all regions of the state, create stable or lower electricity costs and result in more renewable energy being built in Massachusetts.

AIM calls upon the commonwealth to take the following actions:

  • itemize and maintain a list to share with ratepayers of all added costs for every program instituted since the Green Communities Act was signed;
  • project these costs out over three years;
  • update bill impacts for Cape Wind (now almost triple the original estimate).

Such reporting would allow consumers and employers to debate the merits of each program.  Open debate would bring certainty to ratepayer planning, and credibility to the commonwealth. Absent the data, we are left with a government that appears to want to maintain the status quo and marginalize anyone who questions their agenda.