Mass Senate energy bill tackles high costs

Legislation aimed at tackling the drivers of high energy costs in Massachusetts unveiled Monday by state senators closely mirror a bill released last week opening up long-term renewable energy contracts to competitive bidding and more than doubling the amount of renewables required to be purchased by utilities.

The bill (S 2190) triples the net metering cap for private and government customers who qualify for rebates for excess energy generated on-site and sold back to grid, according to a summary obtained by the News Service.

The average electric rate in Massachusetts is 14.24 cents per kilowatt hour, the seventh highest in the country and more than 4 cents higher than the national average. Public officials are putting high energy costs into the mix of debate over how to create jobs and reduce financial burdens for small businesses.

The bill was endorsed early Monday by the Committee on Telecommunications, Utilities and Energy and referred to Senate Ways and Means. The bill summary says the legislation will not create any new costs for the state, noting utility company assessments fund state regulatory operations.

The legislation is a redraft of 11 bills filed this session, including S 1679 dealing with competitive bidding for renewable energy that was released favorably from committee last week.

The bill would increase the overall net metering cap from 3 percent to 6 percent of peak load, exempting Class I facilities from the cap altogether as long as the facility’s capacity is under 10 kilowatts or 25 kilowatts, depending on the connection, or if the facility’s generation will not exceed the customer’s consumption over a calendar year.

The increased cap would allow private customers to sell up to 3 percent of peak load power generation back to the grid, while government entities and municipalities would be allowed to sell an additional 3 percent, providing incentives for on-site renewable energy generation.

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 4 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 4 percent of the annual payments to 1 percent.

“The issue, particularly around competition and transparency, seems to be an important place to make changes, and I think this is a positive change that will only be good for Massachusetts providing for competition, so I support that,” Coakley told the News Service last week.

Under the bill, the Department of Public Utilities would be required to 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.

Certain solar and wind projects would be exempt, under the bill, from local property taxes if they produce up to 125 percent of the property’s annual energy needs, with the output behind the meter, and all other projects would be exempt as long as the owner made a payment in lieu of taxes to the municipality equal to 5 percent of the system’s gross electricity sales the year before.

After a committee hearing last week, Downing said the bill was not an attempt by lawmakers to pass judgment on a merger deal between NStar and Northeast Utilities that required the company to purchase 27.5 percent of the controversial Cape Wind project.

Critics called the deal “legalized extortion” and warned that the price of off-shore wind energy would drive up costs for homeowners and small businesses.

“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 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,” Downing said.

The bill also creates a voluntary accelerated rebate pilot program for the five largest electric and five largest gas users in each utility service territory, making them eligible for a 100 percent rebate for qualified energy efficiency measures.

The DPU would have an additional 4 months – 10 months total – to review rate cases, under the bill, and gas and electric companies would be subjected to rate reviews every three years.

The Department of Public Utilities would also be directed under the bill to study the costs of low-income electric and gas programs, and the Department of Energy Resources would conduct a study of greenhouse gas emissions.