BOSTON – Continuing its efforts to remove obstacles for businesses to grow, the Senate on Thursday took on the high costs of electricity in Massachusetts by unanimously passing legislation that will create more competition for energy contracts and bring down prices, State Senator Jamie Eldridge (D-Acton) announced.
The bill also includes a crucial provision to help expand clean energy production across the state, by expanding the state’s net-metering program and doubling the net-metering cap. This provision is based on legislation originally filed by Senator Eldridge last year in response to the warning of renewable energy businesses across the Commonwealth, who told legislators that if the cap isn’t raised, the solar industry will be unable to expand and growth in the clean energy sector will plateau, causing businesses to shrink their workforce, and look towards other states to continue to grow.
“Net-metering has proven to be a great success, and passing this bill will help ensure that success continues. I know that several towns in my district, including Harvard and Shirley, are interested in expanding their use of solar to take advantage of the net-metering program. Increasing the net-metering cap will allow these towns, and many others across the Commonwealth, to have more control over their energy future with proven and reliable methods as solar and other alternatives,” said Senator Eldridge
Senator Benjamin B. Downing (D-Pittsfield), lead sponsor of the bill, said: “This legislation builds on Massachusetts’ nation-leading clean energy policies and ensures those policies are advanced in the most cost effective way. It will continue the job growth we have seen in clean energy and energy efficiency, while ensuring rate payer dollars are being used effectively.”
Because of its ongoing commitment to renewable resources, the Commonwealth has the second-lowest greenhouse gas emissions of any region in the nation. It has positioned itself as a frontrunner in the clean energy economy, which currently employs 64,000 people statewide, and become one of the top states for innovation, investment, employment and policy.
The state needs to maintain this position without harming the many successful businesses for which electricity is a detrimental cost of doing business.
The average electric rate in Massachusetts is 14.24 cents per kilowatt hour – the seventh highest in the United States and well above the national average of 10 cents. Part of the reason is that Massachusetts, in comparison to other parts of the country, does not have an abundance of natural resources such as coal or gas. In fact, New England states in general have very little domestic sources of fuel for electricity.
But the high costs are also driven by the industry itself – a combination of aging transmission and distribution infrastructure, and a lack of accountability from investor-owned utility companies.
The bill passed in the Senate on Thursday addresses the high cost of electricity in Massachusetts in an effort to support job creation and economic recovery. It seeks to reduce the price of electricity by identifying cost-drivers, reviewing rates on a more regular basis, and demanding more competition.
To establish competition in the market, the bill would end the current long-term contract program under the Green Communities Act by December 2012 and require investor-owned utilities to competitively bid proposals from renewable energy suppliers for long-term renewable energy contracts. And by increasing the overall net metering cap from 3 percent to 6 percent, the legislation doubles the existing limits on municipal and privately-owned projects that generate their own renewable energy.
The legislation requires gas and electric companies to file rate cases every three years with DPU; increases from six to 10 months the time DPU has to review rate cases; prevents DPU from approving rate case settlements more than once every six years; and requires DPU to spread over a two-year period any rate increase that would exceed 10 percent in one year, with a first-year cap of 7.25 percent.
The bill also requires the Department of Energy Resources (DOER), when it intervenes on cases before the Department of Public Utilities (DPU), to do so on behalf of all commercial and industrial ratepayers.
The legislation also does the following:
- Clarifies current law regarding solar and wind property tax classifications;
- Expands DPU’s oversight to any transaction involving a regulated company, not just Massachusetts-regulated companies;
- Establishes a voluntary energy efficiency pilot program for the five largest electric and five largest gas users in each utility’s service territory; and
- Allows hydroelectric power to count toward the Commonwealth’s renewable and alternative energy generation goals under the Green Communities Act.
The bill now goes to the House of Representatives.