Environment

Power subsidy settlement OK’d

Bowles says settlement removes cloud

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CORRECTION: Because of incorrect information supplied to CommonWealth by the Patrick administration, the initial version of this story said the premium for Massachusetts-generated solar was roughly 30 cents per kilowatt hour. The actual premium is a floor of 30 cents per kilowatt hour and a ceiling of 60 cents.


The Patrick administration today partially settled a legal challenge to its renewable power initiative, letting some electricity suppliers avoid the payment of hefty subsidies to Massachusetts-based solar projects.

TransCanada Power Marketing Ltd. of Calgary sued top officials in the Patrick administration in late April for steering subsidies to renewable energy projects in Massachusetts while excluding projects outside the state. TransCanada was affected by the state’s program in two ways: It sells electricity to Massachusetts customers, who would have had to pay the subsidies, and it also operates a major wind farm in Maine.

Under the state’s solar subsidy program, power sellers are required to buy a small portion of their electricity from Massachusetts-based solar companies and pay a premium of 30 to 60 cents per kilowatt hour, which is three top nearly seven times what electricity currently costs. Under terms of the partial settlement, the subsidy will be reduced to 6 cents per kilowatt hour on power contracts that were signed or renewed before Jan. 1.

Several power suppliers operating in Massachusetts enter into long-term contracts for their electricity, and the TransCanada settlement would benefit them. But the settlement is unlikely to affect the bulk of electricity customers in Massachusetts, who buy their power through their local utilities under so-called basic service contracts that are negotiated every six months.

Bill Taylor, senior vice president of US power for TransCanada, said the company is continuing to challenge another Massachusetts subsidy program requiring electricity sellers to negotiate long-term contracts with Massachusetts-based renewable energy suppliers. Under that subsidy program, National Grid negotiated a contract to buy power from Cape Wind at 20.7 cents per kilowatt hour starting in 2013, with a provision to increase the price 3.5 percent a year for 15 years.

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Bruce Mohl

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About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Ian Bowles, the Massachusetts secretary of energy and environment and one of the officials named in the TransCanada lawsuit, said in a statement that he was pleased with the settlement and confident the state would prevail on the challenge to its long-term contracts provision.

“This settlement removes the cloud from the Commonwealth’s solar credit program and allows this innovative financing mechanism to go forward, continuing the momentum toward Gov. Patrick’s goal of 250 megawatts of installed solar power by 2017,” he said in a statement.

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