Healey comes out strong for renewables

Says subsidies help level playing field with fossil fuels

What follows is a copy of Attorney General Maura Healey’s prepared remarks to the NECA Renewables Conference minus her introductory statement.

Today, I would like to talk to you about my vision for a clean energy future and my plan to serve as a 21st Century ratepayer advocate.

The clean energy sector is now a $10 billion dollar industry in Massachusetts, employing 88,000 workers in 6,000 firms, primarily in the renewable energy and energy efficiency fields. Between 2013 and 2014, clean energy employment grew by 10.5 percent—that is eight times faster than the state’s overall job growth rate. This year, clean energy employers expect to add another 11,700 jobs. These are good, quality, long‐term jobs.

The clean energy sector is vitally important to our future. This dynamic growth was driven in part by smart state policies—such as the Regional Greenhouse Gas Initiative, Green Jobs Act, renewable portfolio standard, Global Warming Solutions Act, and Green Communities Act.

Massachusetts has been tremendously successful in advancing the goals of our state energy policy—for example, Massachusetts has achieved top national ranking among the states for energy efficiency following the Green Communities Act.

I’d like to talk to you a bit about the true cost of energy. As a 21st Century ratepayer advocate,

I believe that, when we think about energy prices, we also need to think about the cost of climate response.

More extreme weather events cause governments, businesses, and families to incur large expenses to repair damage. For example:

  • Damages from Hurricane Sandy totaled $65 billion, and $15.8 billion for Hurricane Irene
  • According to EPA, climate and weather disasters have cost the American economy over $100 billion since 2012 alone.

There are costly public health impacts associated with climate change, as well. Climate change increases ground level ozone, which impairs lung function and can result in increased hospital admissions and emergency room visits for people suffering from asthma, particularly children.

More extreme heat and rainfall events also present safety and health hazards for people— especially our most vulnerable residents. A few years ago, Scientific American, in a series on climate justice, identified our own East Boston as a community on the “front lines of environmental disruptions” expected as a result of climate change.

EPA estimates that every dollar Americans invest in its Clean Power Plan to reduce carbon dioxide emissions will earn 7 dollars in health benefits from soot and smog reductions alone.

Fossil fuel companies aren’t paying for climate response costs—we, the public, are.

If you are a business owner who lost money when productivity dropped off during Hurricane

Sandy, or if your home was flooded and you suffered losses, you paid a hidden tax—the costs that coal and oil companies have effectively passed on to the public. These are the large and growing cost impacts we also need to be thinking about when we think about energy prices.

Investments in renewables and energy efficiency today can mitigate those costs—they are necessary investments to protect us from the damaging and costly impacts of climate change.

And, we don’t need to choose between environmental and economic sustainability—we can make those investments, while growing the economy, and we know that because our experience in RGGI tells us it’s true.

We are fortunate to live in the region that spearheaded the lowest cost, market‐based means for reducing carbon pollution—the RGGI cap and trade program—which, as many of you know, was modeled on emissions trading concepts advocated through the ‘80s and ‘90s by leading free market conservatives.

RGGI has already reduced regional carbon dioxide emissions by 40 percent from 2005 levels.

The RGGI states have shown that by encouraging shifts to less carbon‐intensive fossil fuel generation, increasing reliance on renewable power, and reducing the demand for generation through energy efficiency measures, substantial carbon dioxide emissions reductions are possible over a relatively short period—all while maintaining grid reliability and supporting economic goals.

Region‐wide, as one independent study concluded, in the first three years of the RGGI program, the reinvestment of allowance auction proceeds reduced total energy bills across the region by $1.3 billion and added $1.6 billion to the regional economy, creating an estimated 16,000 jobs in the process.

Here at home, since RGGI was implemented, the Massachusetts economy has largely outperformed the nation’s, and Massachusetts employers have added more than 200,000 jobs and pushed employment to record levels. When it comes time to comply with the federal Clean Power Plan, we’ll be relying on RGGI as a key strategy to get us there.

So, the facts are clear: fossil fuels are not the fuels of the future. We simply will not be able to rely on coal, oil, and gas over the long term if we want the world to be habitable for future generations. And, right now, over half of the energy generated in New England comes from natural gas units. That position leaves us very exposed to price volatility, making it hard for business and families to plan for the future. Today, natural gas prices are relatively low; but if the US begins exporting natural gas and prices rise, as they typically do, we want flexibility.

More clean energy in our fuel mix helps us hedge against those price impacts. And that’s good for our economy.

Our office recognizes the important role renewable energy plays in achieving the goals of both ratepayer and climate protection. Renewables have a price, though, just like any form of energy. And when thinking about that price, we must keep in mind the larger context— and that is an energy market that has been distorted by massive subsidies for fossil fuels. The United States still spends nearly $5 billion each year on tax breaks to the oil and gas industry.

In that regard, the market has not really functioned as it should, and leaves alternative forms of cleaner energy at a competitive disadvantage.

Policymakers have increasingly attempted to correct those market features to address emissions reduction goals. So when we look at the Massachusetts Renewable Portfolio

Standards, for example, while the investor‐owned utilities are paying for the renewable energy plus a renewable energy credit, that total price serves to help level the playing field and places renewables on a more equal footing.

And we are beginning to see instances where ratepayers aren’t being asked to pay additional costs for renewables at all. The state’s existing Section 83A onshore wind long‐term contracts were, for example, forecasted to be $682 million below market over the 15‐year life of the contracts.

Global and national markets are recognizing the benefits of cleaner generating resources, and as a result, we have seen the cost of solar dropping substantially. For example, the cost of solar panel arrays are now about half the price they were in 2008, and about 100 times lower than they were back in 1977 (which might explain why The Love Boat wasn’t solar‐powered).

In Massachusetts, solar deployment is creating thousands of new jobs, and growing. As of

February 2015, we have installed 776 MW of solar. That is enough to power 118,000 homes, and has the emissions reduction equivalent of taking 68,000 cars off the road. I was very pleased to hear this week that the Baker Administration is committed to meeting the State’s goal of installing 1600 MW of solar by 2020.

The bottom line is this:

  • Every solar panel installed by a business means less money paid for energy bills and more money available to purchase supplies or make payroll.
  • Every dollar a municipality saves on its electric bill because of efficiency improvements is a dollar available for emergency services and other community needs.

Time and time again we have heard from CEOs and town managers about how these clean energy investments mean real savings for their businesses and municipalities. So, clean energy is the headline. But it’s not the whole story. As I said during my campaign, increasing natural gas capacity must be part of our energy solutions. As we do that, we need to be smart, because any decision we make will be with us for a long time. To that end, this winter has been very interesting, giving us all food for thought.

At the end of 2014, Vermont Yankee retired 615 MW of capacity, and another 585 MW went off line with the retirement of Salem Harbor’s two remaining coal and oil units. Pilgrim shut down during winter storms Juno and Neptune. This February has seen record‐setting cold.

Yet, we did not see the predicted large gas price spikes and resulting impacts on electricity prices.

In fact, according to ISO‐New England, wholesale electricity prices for January 2015 were 60 percent lower than in January 2014. February 2015 prices were also lower than February 2014 prices—despite the fact that February 2014 was warmer.

What made the difference? We know that more LNG was available due to global oil price decline. ISO‐New England’s winter reliability program provided incentives for oil and dual‐fuel generators to increase oil inventories, for natural gas‐fired generators to contract for LNG to supplement pipeline supply, and for new demand response resources. And, possibly, we’re learning as we go.

Our experience this winter has shown that year to year shifts in the market can make a big difference for ratepayers—and it illustrates that we need to be very thoughtful about the infrastructure investments we make now to expand natural gas capacity.

Of course, one year’s worth of data doesn’t provide complete answers. The real question is what is the most cost effective strategy for getting to the lowest emission energy future—the safe future for our communities, economy, and environment. Is a market intervention justified here to address price volatility? Or is it sufficient to continue to build what is economic based on market demand? And how do we best shield ratepayers from undue risk and achieve the legal mandates of the Massachusetts Global Warming Solutions Act and anticipated federal regulation?

It would not be prudent for us to put in place and maintain more capacity than we need, so the choices we make should be based on accurate data and a realistic assessment of need, and those choices must be the product of a transparent process. To that end, our office is actively engaged in the FERC pre‐filing docket for the Northeast Energy Direct project, and we are monitoring other projects carefully.

As the ratepayer advocate, we will make sure that when we invest, we do it wisely, that benefits inure to customers, and we minimize impacts to our most vulnerable low income ratepayers and businesses.

Our office understands the important roles played by solar and other forms of clean energy, and the need for continuing measures to ensure that those industries can mature and ultimately thrive, independent of the programs that have helped launch their success in the Commonwealth. We have made huge strides, and we should be proud of that progress.

But we must do more. As your 21st Century ratepayer advocate, I am committed to partnering with clean energy allies to continue to advance our clean energy future.

I will use my seat on the Energy Efficiency Advisory Board to ensure Massachusetts achieves the greatest level of cost effective efficiency possible with every dollar invested. To fully realize the potential of clean energy generation, I will work to ensure that the electric distribution companies modernize the electric grid to meet today’s energy demands as well as those of the future.

Grid modernization must be accomplished in a way that benefits ratepayers by reducing costs and storm outages, equitably distributes the costs of the grid investments, and helps secure our clean energy future by better equipping our electric grid to integrate renewable energy resources.

I firmly believe the best fuel mix for the Commonwealth and the region will have a robust and diverse mix of clean energy, including large scale hydro. I support coordination of our regional renewable procurement policies, and will be at the table working hard to make sure that the Commonwealth realizes the benefit of a lower greenhouse gas energy source, and that the associated transmission costs are as low as possible and allocated fairly and proportionately among the states using the electricity.

Meet the Author

Any future program adopted by the state for procurement of long‐term renewable energy contracts should use a competitive process that ensures that the best and most efficiently priced resources are selected. We also must also establish the next generation of net metering and solar programs. And I will seek savings for ratepayers by controlling energy costs, in all that we do.

I will continue to listen to all stakeholders and strive for balanced solutions. I look forward to working with all of you.