STATE HOUSE NEWS SERVICE
LEGISLATION THAT lawmakers hope will turbocharge the growing offshore wind industry in Massachusetts and help the state meet its climate commitments easily sailed through the House on Thursday, but Gov. Charlie Baker said he has “a bunch of concerns” with it and expects that it will serve as only a starting point for more wind debate in the coming months.
The House voted 144-12 to pass the bill (H 4515) that would change how the state procures an increasingly important resource, create new tax credits and incentives for offshore wind companies, impose new environmental and fishing industry-related requirements on offshore wind projects, encourage the modernization of the electrical grid, and jumpstart training programs for offshore wind jobs.
The bill, which is a priority for Speaker Ron Mariano, won the support of more than half of the House Republicans and all but one Democrat (Rep. Colleen Garry of Dracut). The speaker and the House chairman of the Telecommunications, Utilities and Energy Committee said the bill picks up where the 2021 climate roadmap law left off and will put Massachusetts in position to meet its emissions reduction requirements, including becoming net-zero by 2050.
“The bill before us today is the next step in this process. It’s carefully calibrated to attract world-class manufacturing facilities, intensive workforce training initiatives and the investment necessary to prepare our electric distribution system for the energy needs of the future. And we will do it all by building an industry that minimizes potential impacts on the maritime industries and coastal environment while maximizing the benefits for our environmental justice communities,” Rep. Jeff Roy, the Franklin Democrat who chairs the TUE Committee for the House, said. “And it builds on the power of wind not only to supply clean energy, but to provide robust economic development as well.”
Massachusetts has two offshore wind projects totaling about 1,600 megawatts under development and two more projects in contract negotiations. If Vineyard Wind’s projects totaling 2,000 MW and Mayflower Wind’s projects totaling 1,200 MW become operational — as is expected by the end of this decade — offshore wind will generate roughly 25 percent of Massachusetts’ current annual electricity demand, enough to power about 1.6 million homes, the Baker administration has said.
“ELM congratulates the House for taking critical steps to ensure that Massachusetts is a leader on offshore wind, including addressing transmission, storage, and workforce development,” Susannah Hatch, clean energy coalition director for the Environmental League of Massachusetts, said after the vote. “Since the announcement about this bill while on a tour of the turbines off Block Island, it has been heartening to see the House’s commitment to ensuring the success and responsible development of this industry, which is the single biggest lever we have to reduce emissions while strengthening the economy.”
Thursday’s debate in the House is not likely to be the last time offshore wind policy is discussed on Beacon Hill between now and the July 31 end of formal sessions. Senate President Karen Spilka has said her branch is interested in tackling a broader climate bill and Gov. Charlie Baker said on GBH Radio that he views the House bill as merely a starting point.
“This is sort of round one of what will be a very complicated back and forth between all of the various players that are involved in it,” the governor said Thursday just before the House began its debate. He added, “I have a bunch of concerns about this particular bill. I do think having another wind bill and the ability to continue to procure additional offshore wind is a good idea. But I’m quite sure this one’s gonna go through many iterations between now and the time it gets through the process.”
Baker last year filed his own bill to reshape how Massachusetts secures offshore wind and to invest $750 million from the American Rescue Plan Act to establish a clean energy investment fund that his office said would represent “the single largest investment in the clean energy economy in Massachusetts to date.”
Much of the House bill revolves around the Massachusetts Clean Energy Center and a proposed Offshore Wind Industry Investment Fund, which Roy said is designed to promote the growth of offshore wind manufacturing facilities in Massachusetts, provide incentives for companies to locate here, help developers cover the costs of connecting their cleaner power to the electric grid, and provide funding for port infrastructure and workforce training.
The bill’s provisions altering how Massachusetts selects offshore wind projects would essentially pivot the state from focusing mostly on cost and towards other aspects of the bids, like job creation and long-term economic development. The bill would also take the responsibility for selecting projects away from utility companies and put it in the hands of the executive branch and a selection committee with some members appointed by legislative leaders.
The House bill also seeks to require that utilities proactively upgrade the transmission and distribution grid to improve reliability and resilience, and to accommodate greater renewable resources like wind and solar.
“We have already authorized 5,600 megawatts of offshore wind and if that offshore wind were ready tomorrow to produce all this energy, quite frankly, our grid would not be able to handle it,” Roy told the News Service this week.
Before the bill got to the House floor Thursday, leadership backed away from a proposal to triple an existing per kilowatt-hour charge on electric customers to fund the new offshore wind industry trust fund. That increase, which would have cost the average electric customer $7.20 a year, was included in the version that the Telecommunications, Utilities and Energy Committee released about six weeks ago but was dropped in the Hosue Ways and Means Committee.
The bill, though, still includes a new charge for all natural gas customers, one that Roy said would add an estimated $1.37 to the average gas customer’s monthly bill and generate $23 million in annual revenue for the existing Massachusetts Renewable Energy Trust Fund while the proceeds from the existing 0.5 mill per kilowatt-hour charge that all electric customers pay would flow to the offshore wind investment fund for the next 10 years, under the bill.
Rep. Kelly Pease, a Westfield Republican, made his inaugural speech on the House floor urging his colleagues to support his amendment that would have removed all customer charges and more from the legislation.
“They say it’s not much of an increase. But when you talk to families who are living paycheck-to-paycheck or seniors who are trying to pay the property tax bills to stay in the house that they raised their family in, I think any kind of increase is not a good time, especially with these inflationary times we live in with all goods going up,” Pease said. His amendment was rejected with 28 representatives in favor and 127 opposed.
Mariano said the House will look for other revenue sources as well, given that the latest draft increased the maximum allowable amount of annual incentives that MassCEC could distribute from the $30 million that the TUE Committee approved to $50 million.
“What we’re trying to do with this bill is create an industry and what we didn’t want to do is lose the political battle on wind expansion by putting too much of a burden on the consumer right away. You know, we will look at other sources of revenue,” Mariano said on Bloomberg. “We’ve kept the fees in this bill to the very, very minimum. We kept the fee on electrical the same and then we added natural gas which … has never had a fee on it. So all we did was balance that out with the other electrical [charge]. The fees are at a minimum here and we’ll look at other ways to finance some of the expansion.”
Baker mentioned the fees included in the House bill among the concerns he has with the approach pursued by Mariano and representatives.
“We don’t believe the fee needs to be there or fund something that we paid for using ARPA money in our proposal. I’m also a little troubled by the fact that the vast majority of that fee is going to go to the offshore wind industry as sort of an innovation proposal. Our proposal was we should be interested in all kinds of energy innovation,” Baker said on GBH.
Later on Thursday afternoon, Baker’s Executive Office of Energy and Environmental Affairs put out a statement echoing the governor’s remarks. Spokesman Troy Wall also said the House bill “could create a conflict of interest by involving legislators in offshore wind contract negotiations.”
Ahead of Thursday’s planned debate, the Massachusetts Fiscal Alliance and Responsible Offshore Development Alliance released statements opposing the House bill’s provision that would significantly deemphasize the current requirement that each new offshore wind project delivers power at a cheaper price than the one that came before it. The House bill would remove the cap in most situations.
“Massachusetts already pays some of the highest prices in the country for electricity and the price cap was designed to protect ratepayers. Any modification to weaken the cap, will make ratepayers more vulnerable to higher costs. Now is not the time to expose Massachusetts ratepayers to higher electricity costs, even if it means some offshore wind companies will make less money,” MassFiscal spokesman Paul Craney said.
Though he cast some shade on the House bill Thursday afternoon, the House may have an ally in Baker when it comes to the price cap. Baker, in his own offshore wind bill, last year proposed to scrap the cap.
Though the removal of the price cap could lead to higher prices for offshore wind power, that is far from a certainty. In the middle of the state’s second solicitation, in 2019, the governor signed a bill temporarily suspending the price cap and Mayflower Wind’s winning bid still came in below the price of the Vineyard Wind I project that preceded it.
“Experts in 2020 expect future onshore and offshore wind costs to decline 37 – 49 percent by 2050, resulting in costs 50 percent lower than predicted in 2015. Given these circumstances, there is less concern that we will get extreme bids without the offshore wind price cap,” a report compiled by Roy’s office said in its section recommending the elimination of the price cap. “The Commonwealth can always choose to not take bids if the pricing is egregious. And removing the price cap will likely bring additional value to Massachusetts in terms of storage solutions, interconnection, and economic development opportunities.”
That 2019 procurement also showed that the removal of the price cap alone may not be enough to generate significantly more interest in Massachusetts’ offshore wind solicitations. Just three bids came in that price cap-free round — from Mayflower Wind, Vineyard Wind and Bay State Wind.
And the universe of companies that hold leases for offshore wind sites off New England is somewhat limited, too — Vineyard Wind, Mayflower Wind, Equinor and Orsted/Eversource.