Massachusetts Energy Bill Emerges from Senate Committee on Ways and Means

windmill-640x426-1Last Friday, the Senate Committee on Ways and Means released its version of the energy bill that passed the House earlier this month. Whereas the House bill would require distribution companies to procure 1,200 MW of offshore wind power by 2027 and 9,450,000 MWH of hydroelectric power by 2022, the Senate’s version would require 2,000 MW of offshore wind by 2030 and 12,450,000 MWH of “clean energy generation” by 2018. Importantly, the Senate defines “clean energy generation” more broadly to permit new Class I renewable portfolio standard (RPS) resources to alone qualify for long term contracts. The House bill requires that any Class I resources be firmed with hydroelectric power.

Overall, the Senate’s legislation is much broader in scope than the House analog, which largely focused on offshore wind and large-scale hydro. Some proposed differences are as follows:

  • The Senate version drops the controversial “remuneration” charge included in the House bill, which would allow distribution companies to recover up to 2.75 percent of the annual costs associated with the required procurements.
  • The Senate’s bill would double from one to two percent the amount of renewable energy utilities must purchase under the RPS for compliance years after 2016.
  • The Senate’s bill directs the Department of Public Utilities (DPU) to promulgate regulations requiring transmission costs to be included into bid proposals. The House’s version had merely permitted their inclusion.
  • The DPU regulations would also allow long-term contracts for clean energy generation resources to be paired with energy storage systems.
  • The Department of Energy Resources (DOER) and DPU would be permitted to require a bond or other form of security to ensure compliance with the procurement requirements.
  • Unlike the House bill, the Senate’s draft would not limit offshore wind eligibility to only those projects completed in federal lease areas.
  • In addition, the bill tasks DOER with determining whether to establish procurement targets for energy storage resources. DOER would need to adopt appropriate targets by July 1, 2017, and the targets would need to be met by January 1, 2020. The bill would permit utilities to own storage projects. The bill would also permit the use of efficiency funds or alternative compliance payments to fund storage projects if the projects provide peak load electric or gas reductions.
  • DOER would be required to adopt an energy rating system for residential dwellings. A home’s rating, along with its energy audit reports, would be disclosed prior to a sale.
  • The bill would also establish a renewable energy finance task force to “research and identify gaps in renewable energy infrastructure financing and . . . develop a plan to reduce those gaps.” The task force would need to submit this plan to the legislature by January 1, 2017.
  • The bill would mandate that DOER conduct a study on grid modernization by October 1, 2017.
  • The Senate’s draft does not contain the property-assessed clean energy (PACE) financing provisions that were present in the House bill.

The Senate is scheduled to debate the bill on Thursday. If it passes, both chambers will need to reach a consensus on the legislation before the end of the formal legislative session on July 31.

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