Editorial : A legislative mish-mash will hike electricity costs
Taxpayers state- and nationwide must pay the bill for the electricity they use. Encumbered as the energy and electricity generation market is by federal and state imposed regulatory burdens, it is reasonable to conclude that these cumbersome and often nonsensical impositions needlessly raise the cost of power.
Martha Coakley, the attorney general of Massachusetts, which sports the seventh highest average electricity rate in the nation, thinks so.
After a careful review, General Coakley drew attention to the forecast that state ratepayers – homeowners and businesses – will shell out billions in higher electricity costs, because of the state's crazily generous subsidies for the creation of large scale, non-fossil fuel generation and the regulations supporting overpriced electricity generated by wind and solar.
General Coakley testified at a hearing before the legislature's Joint Committee on Telecommunications, Utilities and Energy. The hearing examined the 2008 Green Communities Act that set goals and provided incentives for clean energy production and consumption.
"Despite helping to stimulate job growth in the clean energy sector and reduce carbon emissions, the state's 2008 Green Communities Act has come at a cost to consumers, which is expected to grow by up to $4 billion over the next four years …", according to a State House News Service report of Ms. Coakley's testimony at the hearing.
She said the cost of implementing the program over the next four years will cause delivery costs for electricity to rise seven percent by 2015. And Massachusetts electricity costs, more than $22 billion annually, are already among the highest in the nation.
The legislature paid attention. Sort of.
Ms. Coakley recommended that long-term renewable energy contracts be competitively bid. The Patrick administration disagreed with the notion of competitive bidding, but as we report this morning, legislation incorporating competitive bidding in the market for renewable energy has had favorable reviews in the legislature.
But, this complicated bill (S 2190) turns out to be a mishmash of sensible efforts to moderate the rush to raise electricity costs to Massachusetts consumers and hard to follow provisions that cannot help but raise those costs.
Consider this description of the provisions in the legislation. "The Telecommunications, Utilities and Energy Committee endorsed a bill last week that would require utility companies over the next four years to purchase an additional four percent of peak-load power needs from renewable sources through a competitive bidding process.
"Utilities will be required to complete two procurements by December 2016 for the additional power, entering into 15 to 20-year contracts, instead of a 10 to 15-year timeframe.
"The bill would also reduce the incentives for utilities to sign long-term renewable contracts criticized by Attorney General Martha Coakley as 'sweetheart deals' by reducing the annual remuneration to the utility from four percent of the annual payments to one percent."
This hardly reads like a government effort to restrain the growth of electricity rates by encouraging the electricity generation industry to be as efficient and productive as it can be. Instead, it smells like legislators treating a core utility like a push me-pull me toy, in a confused attempt to placate critics of existing policy and frothing interest group demands at the same time.
Finding a way to spur funding for the hapless Cape Wind project and other offshore wind proposals is the true goal here.
"I think there's a really strong case to be made for Cape Wind that it's cost effective over the long term. What we did isn't a judgment upon what the Section 83 program [Green Communities] was before, it's about what would be the best moving forward, and just as we don't think that least cost should be the (standard), we do think that a competitive bid on cost effective terms will help meet the broad variety of goals that we have," the committee chairman said.
And, to mask what will certainly be sharply increasing electricity rates, the bill provides that the Department of Public Utilities must spread approved electricity rate increases exceeding 10 percent over two years, with a maximum 7.25 percent increase in the first year to ease the sticker-shock on consumers. God bless these solons, one and all, but it's not merely "sticker-shock." It is financial damage to ratepayers, large and small.
What's certain is that if one can ever divine the real outcome this legislation seems to envision, one can be entirely certain that Massachusetts electricity ratepayers will pay a big price.