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.)

But Spilka and Sen. Ben Downing of Pittsfield, the Senate’s point person on energy, said they did not include the restrictive language in their bill because they wanted to maximize competition for the offshore wind contracts.  “We want all projects that are out there to compete to get the best deal for ratepayers,” Downing said on the call with reporters.

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.

The Senate bill includes provisions requiring homeowners to produce the results of a home energy audit when they list their property for sale. The bill also calls for the Department of Energy Resources to establish a home energy rating system so homeowners and buyers can quickly understand what it costs to power a home and the greenhouse gases emitted by the property.

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.

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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.

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.

  • NortheasternEE

    The deregulated market for electricity, set up 20 years ago to lower rates, has morphed into a market dominated by Beacon Hill special interest groups, while rates skyrocket, and grid stability is continuously jeopardized.

    • Jan Galkowski

      There is no evidence whatsoever that the grid is in danger of instability. Indeed, it won’t be threatened until solar gets up to 14% of total, and it will be worse if there are large solar contributors, such as so-called “utility scale solar”, than if solar PV is exclusively distributed over residences and businesses. Offshore wind, on the other hand, is indistinguishable from any other base load generator, except that it has a diurnal fluctuation. That’s part of the technology. On the other hand, it does not require the construction of delivery pipelines.

      By the time 14% penetration arrives, if the utilities, like Eversource and National Grid, truly have the public interest in mind, instead of their profit margins, they can upgrade the grid to deal with the voltage variations and other aspects of distributed generation. This is not Flash Gordon technology. The techniques needed to do this are well known, and are the standard material taught in seminars by the IEEE today. Indeed, the Smart Grid section of the IEEE addresses techniques and hardware which can manage the grid on their own, without having central controls. See http://smartgrid.ieee.org/.

      And I am a member both of the IEEE and of the Smart Grid group, and my degree is from MIT.

      Get with the latest technology rather than being stuck in the 20th century and wanting the rest of the world to remain there with you.

      • anonymousnethead

        I remain concerned about grid stability, and would far rather have ISO-NE setting direction than lobbyists and environmental groups. To your points:

        – Offshore wind is still intermittent and non-dispatchable. It simply is not available when a high pressure system settles in, in excessive wind speeds, and in severe icing — all typical conditions for New England coastal waters. The ISO can dispatch reserves based on weather forecasts – but only if those reserves are available for dispatch.

        – Smart grid technologies are necessary for widespread DG, but not a panacea. Last I saw, two-way communication between smart inverters and the grid had neither been standardized nor commercialized. Distributed voltage and frequency support can help with ride-through, but still have their limits. Heavy dependency on distributed resources is going to require grid-scale storage, which is not yet mature, cost-effective technology. As an aside, a recent article in IEEE Spectrum discussed converting decommissioned power stations into synchronous capacitors for ride-through; I hope that the bill incents provision of ancillary services.

        – Cost matters. According to a recent study by Lazard, unsubsidized costs of renewable and natural gas generation stack up like this:
        — Residential Rooftop, $180/MWh
        — Simple cycle gas, $179/MWh
        — Utility scale solar, $72/MWh
        — Combined cycle gas, $61/MWh
        — Utility scale wind, $37/MWh
        (ref: IEEE Power and Energy, Nov/Dec 2015). This is of course based on assumptions about duty cycle, cost of money and other factors. Note the discrepancy between residential rooftop solar and utility scale solar.