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Pulling the plug on high Cape electric rates 

Credit:  By Patrick Cassidy, Cape Cod Times, www.capecodonline.com 28 March 2012 ~~

At roughly 15 cents per kilowatt-hour, average residential electric rates in Massachusetts are tied for the ninth most expensive in the country.

And on Cape Cod, residential rates are more than 2 cents higher than the state average. Only residential customers in Alaska and Hawaii pay higher average rates.

Massachusetts lawmakers are now trying to do something about those high prices.

On Thursday, the Senate takes up a bill intended to rein in electricity prices through tighter oversight of utilities, more competition in the purchase of renewable energy and a higher cap for the sale of renewable energy back into the electric grid by private and government entities, a provision known as net metering.

The legislation, sponsored by Sen. Benjamin Downing, D-Pittsfield, is a mashup of energy-related bills from the past year that address a range of issues, including how often electric rates are reviewed and how National Grid and NStar were able to buy power from the proposed Nantucket Sound wind farm without competitive bidding.

It is largely an attempt to rectify perceived deficiencies in the Green Communities Act, passed in 2008 to encourage more renewable energy in the state.

rates reviewed

The legislation received an important boost Monday when state Attorney General Martha Coakley and Senate President Therese Murray, D-Plymouth, threw their support behind it.

Everyone agrees that the Green Communities Act needs tweaking, Murray said Tuesday.

She declined to pinpoint the controversy on the sale of power from Cape Wind as the driving force behind the proposed changes, focusing instead on the pending merger of NStar and Northeast Utilities.

Although an agreement between the state and the two utilities will lock in base distribution rates for the next four years, other costs can still go up, Murray said.

Customers could still be charged for increases in pension costs, for example, she said.

By requiring the state Department of Public Utilities to review utility rates every three years, as the legislation would do, those costs could be monitored and kept in check, Murray said.

The consistent review of rates is the most important aspect of the legislation, she said.

And not everyone is thrilled with it.

“Everybody needs to walk away a little bit unhappy to make everything work,” said state Rep. Randy Hunt, R-Sandwich, co-sponsor of a bill on competitive procurement of renewable energy included in Downing’s legislation.

The part that gives him the greatest “heartburn” is that the bill doubles the percentage of energy utilities must get from renewable sources, Hunt said.

That measure would raise the price of energy in the utilities’ portfolios, he said. But he came around to supporting the bill because it would make renewable energy bids more competitive, he said.

A common theme during a hearing last year on the Green Communities Act was that long-term renewable energy contracts should be open to competitive bidding as opposed to the bilateral negotiations between National Grid and Cape Wind and then between NStar and Cape Wind, Hunt said.

“Yes, we’re going to require utilities to purchase more renewable energy,” Hunt said. “We’re also going to require them to get competitive bids and review that portfolio.”

Charles McLaughlin, president of the Cape and Vineyard Electric Cooperative, said the part of the bill that increases the cap for net metering is good news for municipalities.

Under the bill, the cap on the percentage of renewable power utilities can accept from private entities would increase from 1 to 3 percent. The cap for governmental entities and municipalities would increase from 2 to 3 percent. “I think that might make us the leader in the country,” state Sen. Dan Wolf, D-Harwich, said.

Now, as utilities approach the cap, individuals and organizations considering projects get nervous, Wolf said. “You can’t start a project and then find out you no longer have the ability to net meter,” he said.

Concerns raised

There is a lot to like in the bill, Susan Reid, Massachusetts vice president and director for the Conservation Law Foundation, said.

But she questioned the benefit of a proposed pilot program that would allow the five largest electric users and five largest gas users in each utility’s territory to do their own energy-efficiency programs using the energy-efficiency payments that go into a state pool.

“There are equity issues and issues in terms of enforcement,” Reid said, adding that it would erode the state’s ability to leverage energy-efficiency funds for a greater benefit.

She also questioned whether more study is necessary before making the quasi-public Massachusetts Clean Energy Center the default entity for procuring renewable energy across the state, as proposed in the legislation.

If utilities could not procure renewable energy on their own to meet state requirements, the agency would find it for them, according to the bill. It would do so, however, based on the lowest cost, not on the current cost-effectiveness standard used by state regulators in their review of Cape Wind’s contract with National Grid.

The proposed bill will not affect the sale of Cape Wind’s power to National Grid and NStar.

Still, Cape Wind president Jim Gordon was quick to criticize the move toward a least-cost approach as part of the central procurement provision.

“We all know that least cost is not always cost effective,” he said. “Does it create jobs? Will it mitigate peak power? You really have to crank all of those elements in there.”

Source:  By Patrick Cassidy, Cape Cod Times, www.capecodonline.com 28 March 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial educational effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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