Yesterday, I joined in a unanimous vote in the Senate to Pass S2200. The unanimous final vote followed contested votes on a number of amendments. The final bill seemed to more or less have the support of environmentalists and the business community.
The bill generally forces greater accountability on utilities for keeping costs down. At the same time, it extends our commitment to transition to more use of renewables in electric power generation.
The bill only applies to investor owned utilities, not to municipal utilities like Belmont Light.
The Senate’s official press release appears below.
BOSTON – Continuing its efforts to remove obstacles for businesses to grow, the Senate on Thursday took on the high costs of electricity in Massachusetts by unanimously passing legislation that will create more competition for energy contracts and bring down prices.
“We’ve streamlined our economic development model, lowered corporate tax rates, given businesses tools to negotiate lower health insurance rates, and once again have frozen the unemployment insurance rate, but the high cost of electricity continues to be a burden on consumers and businesses,” Senate President Therese Murray (D-Plymouth) said. “We want to lift that burden and eliminate the drag these costs are putting on our economic recovery.”
Senator Benjamin B. Downing (D-Pittsfield), lead sponsor of the bill, said: “This legislation builds on Massachusetts’ nation-leading clean energy policies and ensures those policies are advanced in the most cost effective way. It will continue the job growth we have seen in clean energy and energy efficiency, while ensuring rate payer dollars are being used effectively.”
Because of its ongoing commitment to renewable resources, the Commonwealth has the second-lowest greenhouse gas emissions of any region in the nation. It has positioned itself as a frontrunner in the clean energy economy, which currently employs 64,000 people statewide, and become one of the top states for innovation, investment, employment and policy.
The state needs to maintain this position without harming the many successful businesses for which electricity is a detrimental cost of doing business.
The average electric rate in Massachusetts is 14.24 cents per kilowatt hour – the seventh highest in the United States and well above the national average of 10 cents. Part of the reason is that Massachusetts, in comparison to other parts of the country, does not have an abundance of natural resources such as coal or gas. In fact, New England states in general have very little domestic sources of fuel for electricity.
But the high costs are also driven by the industry itself – a combination of aging transmission and distribution infrastructure, and a lack of accountability from investor-owned utility companies.
The bill passed in the Senate on Thursday addresses the high cost of electricity in Massachusetts in an effort to support job creation and economic recovery. It seeks to reduce the price of electricity by identifying cost-drivers, reviewing rates on a more regular basis, and demanding more competition.
To establish competition in the market, the bill would end the current long-term contract program under the Green Communities Act by December 2012 and require investor-owned utilities to competitively bid proposals from renewable energy suppliers for long-term renewable energy contracts. And by increasing the overall net metering cap from 3 percent to 6 percent, the legislation doubles the existing limits on municipal and privately-owned projects that generate their own renewable energy.
The legislation requires gas and electric companies to file rate cases every three years with DPU; increases from six to 10 months the time DPU has to review rate cases; prevents DPU from approving rate case settlements more than once every six years; and requires DPU to spread over a two-year period any rate increase that would exceed 10 percent in one year, with a first-year cap of 7.25 percent.
The bill also requires the Department of Energy Resources (DOER), when it intervenes on cases before the Department of Public Utilities (DPU), to do so on behalf of all commercial and industrial ratepayers.
The legislation also does the following:
• Clarifies current law regarding solar and wind property tax classifications;
• Expands DPU’s oversight to any transaction involving a regulated company, not just Massachusetts-regulated companies;
• Establishes a voluntary energy efficiency pilot program for the five largest electric and five largest gas users in each utility’s service territory; and
• Allows hydroelectric power to count toward the Commonwealth’s renewable and alternative energy generation goals under the Green Communities Act.
The bill now goes to the House of Representatives.