Massachusetts is known as a national leader in “green energy” like wind, solar, and renewable-fueled generation sources – but it’s also known for having the 7th highest electric rates among the 50 states, some 40 percent worse than the national average.
On Monday, two of the state’s most powerful political leaders – Senate President Therese Murray and Attorney General Martha Coakley – threw their support behind a sprawling piece of legislation aimed at ensuring future green-energy projects face much tougher cost competition and price transparency for consumers. The legislation’s set to be taken up by the state Senate on Thursday.
The bill, sponsored by Senator Benjamin Downing, a Pittsfield Democrat who is cochair of the legislative utilities and energy committee, comes on the heels of premium-priced deals signed under pressure from Governor Deval L. Patrick’s administration by National Grid and NStar to commit to buying three-quarters of the power output of Cape Wind, the controversial 130-turbine wind power project proposed for a 24-square-mile zone of Nantucket Sound.
The deals – which in the case of NStar came after months of secret backroom negotiations between Patrick aides and top NStar executives while a separate public review was underway at the Department of Public Utilities – commit the utilities to buying power from Cape Wind at a price estimated by some critics at 140 to 200 percent higher than other renewable or green sources, and far higher than today’s market averages.
(Patrick’s administration says the difference is less than $1 a month on most NStar and National Grid customers’ bills; deal critics say it adds up to hundreds of millions of dollars in ratepayer-funded subsidies and giveaways to Cape Wind.)
“It’s not a matter of if we are going to promote clean energy in the commonwealth. It’s a matter of how,” Downing said at a press conference outside the Senate chambers Monday where he, Coakley, and Murray unveiled the legislation.
Coakley, who has blasted the high cost of many of the green-power deals like Cape Wind signed by Bay State utility companies, said, “This is a huge cost driver for our businesses. It doesn’t need to be.”
The complex legislation – just a Murray-issued summary alone runs to 27 bullet points – would overall increase the percentage of utilities’ peak power demand they negotiate to supply with renewable sources from 3 percent to 7 percent by 2016, but end by Dec. 31 the current procurement scheme that led to the directly negotiated deals with Cape Wind and require utilities to open supply bids to competition.
The measure would also more than double the amount of “net metering” electricity eligible to be produced by small-scale home and business projects like rooftop solar panels or small turbines or hydroelectric facilities.
It would cap annual electric rate distribution increases at 7.25 percent and require all electric and gas companies in Massachusetts – many of which are now operating under negotiated “rate freezes” – to come to the DPU every three years for a rate review and approval.
Bob Rio, vice president of Associated Industries of Massachusetts, which is the state’s biggest business lobbying group and has also heavily criticized – and filed suit to block – the high-priced Cape Wind deals for NStar and National Grid, said it appeared if enacted, the bill would protect Massachusetts businesses from the kind of rate shock AIM predicts they’ll suffer from Cape Wind.
“Cape Wind is probably the poster child for non-competitive clean energy. It’s about three times the cost of competitively bid clean energy,” Rio said. “We can’t afford more projects like that. We have to do competition … You can have clean energy with competition, which will ultimately result in more reasonable rates.”
Sue Reid of the Conservation Law Foundation, a Boston environmental group, said CLF continues to believe Cape Wind is a worthy project that will provide health and economic-development benefits that justify its costs.
“This is about the next phase. We don’t expect something quite like Cape Wind to exist in this next round, and so we want to foster broader competition across renewables,” Reid said. “We’re really delighted to see the potential that this bill has for promoting small-scale renewables across Massachusetts” and making it possible for hundreds more homes and businesses to produce their own locally-sourced renewable energy that can be fed back into the electric grid.
What it all means if this bill is enacted? Going forward, almost certainly it would be less expensive for National Grid and NStar and other utilities to buy electricity produced from alternative and renewable sources. Besides more wide-open competition instead of closed-door single-source negotiations like the Cape Wind deals, it appears the bill makes it possible for Massachusetts utilities to buy a lot more hydroelectric power from Quebec to meet certain state green-power requirements.
(Many environmentalists consider the Hydro Quebec power ecologically dubious because it involves large-scale flooding and massive high-voltage transmission lines sprawling over the landscape.)
However, for the foreseeable future, it’s clear that much of the green energy utilities would buy will be more expensive than electricity produced from conventional sources like nuclear power plants or natural gas- or coal-burning plants, especially as the shale-gas fracking revolution in states like Pennsylvania and Ohio leads to plunging prices for natural gas, which tends to set the market price for electricity in New England most of the year.
And given that utilities will have to buy much more green power – even if they may be able to buy it less expensively than now – the bottom line is neither Coakley nor Murray or her leadership team can assure Massachusetts electric customers: This legislation will cut your electric bills, or make them rise by less than they otherwise would in the future.
“Maybe in a year or two we can come back to you with an answer, but we can’t do that today,” Coakley said.
Downing said he’s confident there will be “more pressure” to reduce rates from this legislation than now exists, but he wouldn’t make a prediction on where rates go. “We’ll make sure that not only we bring renewables on line, but we bring the most cost-effective renewables on line,” Downing said.
When the Senate takes up the electric legislation Thursday, Murray said she anticipates there will be “municipalization” amendments offered on the floor, mirroring legislation she’s backed to create a mechanism for cities and towns fed up with expensive, blackout-prone service from Unitil, National Grid, Western Mass. Electric and NStar to dump those for-profit, investor-owned utilities and replace them with the kind of “muni” utilities 40 Bay State cities and towns have.
Studies have found “muni” utilities cost up to one-third less than for-profit utilities and after Tropical Storm Irene in August, the October snowstorm, and ice storms in years earlier, the munis tended to have much less widespread blackouts and get customers’ power restored several days faster than for-profit utilities that have slashed their staff after big recent mergers and have to rely on line crews flying in from Canada and states as far away as Texas and North Carolina to repair power lines.
NStar and National Grid say it’s unfair to compare their cost and performance to local operations that don’t pay property taxes and don’t have to pay the cost of meeting many state energy-efficiency and green-power mandates.
With videographer John J. Hammann
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