Senate’s ‘aggressive’ energy plan lets Cape Wind bid
Bill ups offshore wind, hydro procurements; doubles renewable standard
THE SENATE UNVEILED an energy bill on Friday that is far more expansive than its House counterpart, increasing utility procurements for offshore wind and Canadian hydroelectricity, doubling the mandated growth rate for renewable energy, and allowing Cape Wind to compete for contracts.
“We tried to be bold and aggressive,” said Sen. Karen Spilka, the chair of the Senate Ways and Means Committee, on a conference call with reporters. She provided a bill summary in advance of the call.
The Senate is expected to debate the bill next week and then House and Senate lawmakers will be charged with resolving differences between the two branches before the session ends at the end of July. Philosophically, the House and Senate approaches are generally in sync; the Senate measure, however, goes further than the House, including proposals on renewable energy, energy efficiency, and energy storage. The Senate and House bills are at odds on remuneration for utilities and Cape Wind.
The House crafted its bill in a way that barred Cape Wind from competing for the offshore wind contracts, largely to avoid the political baggage that the proposed Nantucket Sound wind farm brings with it. The wind farm’s leading opponent, the Alliance to Protect Nantucket Sound, hired former House speaker Thomas Finneran as its lobbyist to keep Cape Wind out of the procurement. (Check out this Codcast on the politics of wind.)
Jim Gordon, Cape Wind’s developer, sounded relieved when he was told the Senate bill would not exclude his project from competing. “I’m gratified that the Senate will allow full and fair competition,” he said. “I hope the House goes along with the Senate and removes the barrier for Cape Wind to compete.”
Downing said the Senate bill also doesn’t include remuneration for utilities for negotiating the long-term contracts for offshore wind and hydroelectricity. The House bill included payments to Eversource and National Grid of up to 2.75 percent of the payouts under the contracts, which could come to tens of millions of dollars.
Utilities say the payments are warranted because there is a cost to them for carrying long-term power contracts on their books, but Downing said he consulted with utility experts and reviewed what other states do and concluded remuneration was not warranted. “We don’t think there’s a compelling public policy case for it,” he said.
The House bill directs utilities to negotiate long-term contracts for offshore wind and hydroelectricity, possibly in tandem with other forms of clean energy. The Senate does the same, but ups the amount of energy sought. The House bill called for a total of 1,200 megawatts of offshore wind nameplate capacity, while the Senate increased that amount to 2,000 megawatts. (Nameplate capacity is the amount of energy that could be produced at optimum output, which doesn’t happen all the time because the intensity of wind speed varies.) The House bill called for 9.45 million megawatt hours of hydroelectricity, the rough equivalent of 1,200 megawatts of power. The Senate bill increases the amount to 12.45 million megawatt hours, roughly 1,500 megawatts.
The Senate number for offshore wind is what some analysts and House wind supporters say is needed to kick-start an offshore wind industry in Massachusetts and ultimately bring down development costs. Downing said the Senate bill went with the larger procurements to help the state meet its greenhouse gas emission targets and replace power-generating sources that are shutting down over the next several years.
While most analysts expect the offshore wind and hydroelectricity procurements to increase electricity prices, at least in the short term, Downing said he expected prices to stabilize and possibly go down over the long run. “If we do not act,” he said, “prices will continue to be incredibly volatile.”
Under existing law, the percentage of electricity derived from renewable sources goes up 1 percentage point every year, with a target of 15 percent by 2020 and 25 percent by 2030. The Senate bill boosts the annual increase to 2 percentage points, which would create a 38 percent renewable energy requirement by 2030. Downing noted California’s target is 50 percent by 2030.
Utilities are seeking state approval to tap their electricity ratepayers for money to finance a new natural gas pipeline into the region, a priority of the Baker administration. The Supreme Judicial Court is currently reviewing a case challenging the legal authority of the Baker administration to approve such an arrangement. Many lawmakers want to take the matter out of the court’s hands and include language in the energy bill that would specifically bar state officials from tapping electric ratepayers for a natural gas pipeline.The Senate bill, like the House bill, includes no references to natural gas, but Downing said he expects a vigorous debate in the Senate on natural gas pipeline financing and leaks. “I would second that,” Spilka chimed in.
The Senate bill also doesn’t deal with solar power, but Downing said he expected an amendment during the debate on expanding solar net metering caps.