November 24, 2011

Green alert on Coakley

BY: Bruce Mohl, CommonWealth, 23 November 2011

Attorney General Coakley insists she is as green as ever, but environmental activists aren’t so sure after her recent testimony on the state’s three-year-old Green Communities Act.

Coakley warned lawmakers on Beacon Hill that the cost of implementing the law over the next four years will be $4 billion, resulting in a 7 percent increase in electricity rates at a time when the state’s economy is struggling to emerge from recession. “We need to fully consider these costs and work to reduce them,” she said in her prepared remarks.

The attorney general’s stark presentation set off alarm bells in the state’s environmental community. “She seemed to be taking aim at our green energy policies across the board,” said Sue Reid, director of the Conservation Law Foundation Massachusetts. Reid says she is arranging a meeting with Coakley to discuss her position.

Jeremy McDiarmid, Massachusetts director of Environment Northeast, said Coakley’s presentation emphasized the cost of the state’s green policies and largely ignored the benefits. “We need to be looking at both the costs and the benefits on an equal footing,” McDiarmid said. “We need a balance.”

Mark Sylvia, commissioner of the state’s Division of Energy Resources, disputed Coakley’s numbers. He predicted electricity rates will rise 2 to 3 percent over the next three years and consumers who take advantage of the state’s energy efficiency programs to reduce their consumption may actually see their electric bills drop. “It’s a great story,” he said of the Green Communities Act.

The attorney general says she remains a big supporter of the Green Communities Act, but she believes parts of the law need to be overhauled. She pulled her cost estimates from a chart buried in a strongly positive Patrick administration report on electricity market reforms. The chart indicates the cost of the state’s electricity initiatives will be roughly $1 billion a year for each of the next four years.

Coakley didn’t mention in her remarks that the same chart also estimated the benefits of electricity market reforms – in the form of energy efficiency, renewable energy development, and energy innovation – will hover around $2.5 billion a year. Coakley left that information out of her speech because those benefits accrue over a long time while the costs will be felt immediately.

“Going green, in the short run, is going to cost us,” Coakley said after a bill-signing this week.

To reduce those costs, Coakley is calling for increased competition and transparency, more cost efficiency, and fewer sweetheart incentives for utility companies. She said long-term renewable energy contracts should be bid competitively, an apparent dig at National Grid’s deal to buy Cape Wind power. She criticized financial incentives given to utilities to meet energy efficiency goals and to sign long-term renewable power contracts.

“We are also concerned with policies that favor more costly technologies and would like to see technology-neutral policies that ensure that the least expensive alternatives are implemented first,” she said.

Her comments on technology-neutral policies mimicked those of the Massachusetts Competitive Partnership, a group of the state’s top business executives. The group says Massachusetts can reach its green emission goals and save $10 billion by adopting a technology-neutral approach with renewable energy.

Under current law, many renewable power generators are subsidized by ratepayers. They are issued one renewable energy certificate, or REC, for each kilowatt hour of electricity they produce. They then sell their RECs to power sellers, who buy them in order to prove that they are meeting the state’s renewable portfolio standard, which currently requires that 10 percent of the electricity they sell come from renewables by 2015.

Under current law, power from wind, solar, small hydro, and biomass projects can be used to meet the renewable portfolio standard. The Massachusetts Competitive Partnership would like to add energy efficiency and big hydro to the mix, but exclude them from the REC subsidy program. In essence, the business officials would let utilities meet their renewable energy targets using energy efficiency projects and large-scale hydro power imports from Canada, which are substantially cheaper than wind and solar. “We think you should go to the lowest-cost alternative,” said Dan O’Connell, CEO of the partnership.

Sylvia, the DOER commissioner, doesn’t think the partnership’s plan would work. He indicated he would keep the existing regulatory system in place to support wind and solar power development while separately encouraging energy efficiency and the importation of large-scale hydro power from Canada.

The green debate is on.

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