New offshore wind bill drops electric bill charges

HOUSE LEADERS on Tuesday abandoned a proposal to hike electric ratepayer bills as they pulled together the votes needed to pass legislation offering significant financial incentives to the offshore wind industry to put down roots in Massachusetts.

“There will be other opportunities to put more money in this. We want to keep the debate about building an industry,” said House Speaker Ron Mariano. “We didn’t want this bill to get killed because of an argument over consumer electric bills.”

An earlier draft of the bill approved by the Legislature’s Telecommunications, Utilities, and Energy Committee called for tripling the existing 30-cent monthly charge on electric bills to promote renewable energy and using the extra 60 cents to help fund an offshore wind investment fund. The bill also called for a new charge on natural gas bills to raise $1.50 a month to seed money to the same fund.

Under the bill taken up by the House Ways and Means Committee on Tuesday and expected to go to the full House Thursday, the increase in the charge on electric bills was abandoned and the existing 30-cent fee was redirected to a new offshore wind investment fund administered by the Clean Energy Center. The new natural gas charge was redirected to promote the development of other renewables.

Mariano called the funding changes “the biggest political change in the bill” as it was redrafted for a vote on the House floor.

Sen. Michael Barrett of Lexington, the Senate chair of the Legislature’s Telecommunications, Utilities, and Energy Committee, was perhaps the most vocal critic of increasing the cost of electricity with new bill surcharges at a time when the state is trying green its electric grid and use the power to supplant fossil fuels for transportation and heating.

Barrett also questioned the removal of a price cap on offshore wind procurements, a requirement that each successive purchase of electricity come in at a lower price than the previous one. He said states that prioritized economic development in procuring offshore wind tended to pay much higher prices for the electricity they are buying.

However, House leaders, eager to attract more wind farm developers to Massachusetts and the industry needed to support them, intend to largely do away with the price cap and give developers more financial flexibility to incorporate economic development projects into their bids.

In an email, Barrett said he was pleased to see the electric bill surcharges eliminated but still concerned about the overall direction of the legislation. “I worry about an inadvertent false equivalence, in which one slice of the clean energy pie is treated and funded the way we treat and fund the entire life sciences sector. For climate policy after this, where do solar, geothermal, and energy efficiency fit in? The bill gets the proportions wrong,” he said.

“The bottom line is the impact on the ratepayer’s bottom line. How much will all the subsidies and tax breaks cost? Where’s the cost-benefit analysis? A lot of money is moving around here,” he said

Overall, the bill is an attempt to mirror the type of investment the state made in life sciences in 2008, which many credit with helping the industry become a juggernaut. The House bill would make the state’s Clean Energy Center the driver of offshore wind development in Massachusetts. The agency would be tasked with certifying offshore wind businesses and doling out tax incentives, loans, grants, and other benefits to get them to do more of their business in Massachusetts.

With the Clean Energy Center adopting a much higher profile, Roy’s bill would broaden the makeup of its oversight board to make it a more independent quasi-authority rather than an arm of the governor’s office. The bill gives the Senate president and House speaker the power to each name an appointee to the board.

It’s unclear whether the bill creates other funding sources for the Clean Energy Center. One provision would create a $50 million tax incentive program administered by the center, up from $30 million in the earlier draft of the bill. Rep. Jeffrey Roy of Franklin, the House chair of the Legislature’s Telecommunications, Utilities, and Energy Committee, said the additional funding would be coming from the state.

The bill also creates a new board set up to select the winners of future offshore wind procurements. Currently, the state’s private utilities handle that task. The new board would consist of two members of the governor’s cabinet, an independent evaluator, and the appointees of the Senate president and House speaker. The appointees could not be lawmakers themselves.

The bill also calls for the creation of a Grid Modernization and Planning Council, major investments in education to build a workforce for the offshore wind industry, and significant investments in energy storge and transmission. “It doesn’t do us any good to put up windmills and not get the electricity into the grid,” Mariano said.

The speaker said the industry is vital to the state’s future. “There’s no question we need offshore wind to add to our portfolio to increase our independence and reduce our emissions,” he said.