Draft Released of Highly Anticipated Massachusetts Energy Bill

This week a draft of the long-awaited Massachusetts energy bill was reported out of the Joint Committee on Telecommunications, Utilities and Energy. The bill would require the Commonwealth’s distribution companies to competitively solicit long-term, fifteen- to twenty-year contracts for large-scale offshore wind and hydroelectric power. Notably absent from the bill are provisions addressing resources such as solar, onshore wind, nuclear, energy storage, and energy efficiency.

The bill seeks to jumpstart the development of offshore wind in federal lease areas by directing distribution companies to enter into contracts for 1,200 MW of offshore wind power before July 1, 2027. The bill permits staggered solicitations, so long as each individual solicitation is for at least 400 MW of aggregate nameplate capacity and each subsequent solicitation occurs within twenty-four months of a previous one. The first competitive solicitation for offshore wind power would be required to occur before July 1, 2017.

The bill also directs distribution companies to solicit proposals for 9,450,000 MWh of firm hydroelectric power beginning on January 1, 2017. The bill alternatively allows utilities to couple their hydro procurements with new Class I renewable portfolio standard (RPS) resources. Thus, under the bill’s current language, if other renewable resources such as onshore wind and solar are to be included in the proposed procurement requirements, they would need to be paired up with hydro.

The provisions addressing hydro power do not contain language allowing for a staggered procurement schedule. Another notable difference between the Committee’s treatment of offshore wind and hydro is that the hydro provisions permit the utilities to solicit long-term delivery commitment agreements predicated upon the completion of an associated transmission line.

If the bill is passed, the Department of Public Utilities (DPU) and the Department of Energy Resources (DOER) would be tasked with promulgating implementing regulations. Among other things, these regulations would allow transmission costs to be incorporated into proposals and recovered through federal transmission rates. The DPU would also be responsible for the ultimate review and approval of all proposals. As part of this process, the DPU would be required to consider the attorney general’s recommendations. The bill authorizes the DPU to terminate a solicitation if the agency determines that it received no reasonable proposals.

Distribution companies would likewise be permitted to reject unreasonable proposals. However, if the utilities reject all of the proposals received in response to a solicitation, then the bill requires the DPU to initiate a docket to assess the companies’ rationale. In addition, if distribution companies cannot agree on a winning bid, then the DOER, in consultation with the DPU, will issue a final determination of the winner.

The bill’s next stop is the House Committee on Ways and Means. Once approved there, the bill will head to the House floor. Thereafter, the Senate will likely address its own bill. There is therefore considerable opportunity for the bill’s language to change. But the clock is ticking, as the formal legislative session ends on July 31.

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