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Downing says despite energy inflation, commitment to renewables important

By Matt Murphy / State House News Service
Tuesday, March 27, 2012

State Sen. Benjamin Downing on Monday said the state can’t afford to sacrifice its long-term renewable energy goals for immediate cost reductions, calling for a “right balance” even as some questions remain about how increased renewable energy requirements will affect electricity prices.

“I don’t think we can choose between renewables and low cost. I think there’s a way to do cost effective renewables and if we delay the transition to clean energy it will only cost more in the long run, so it’s not a matter of if we’re going to promote clean energy in the Commonwealth. It’s a matter of how,” Downing told reporters at a press conference.

The Senate Ways and Means Committee on Monday released a bill that would more than double to 7 percent the required amount of energy to be purchased through long-term, competitively bid contracts by utilities. Attorney General Martha Coakley called it a “common sense update” to the Green Communities Act of 2008.

Downing, Senate chairman of the Telecommunications, Utilities and Energy Committee, said the potential for more costly renewable energy contracts would be mitigated by the introduction of competitive bidding for long-term contracts, and more frequent rate reviews by the Department of Public Utilities to justify additional costs.

“For too long, we’ve been on autopilot for rates,” said Downing, the principle architect of the measure.

Some business groups have raised concerns that increasing the required amount of renewable energy could add costs for ratepayers, but on Monday leaders reviewing the bill said it was a step in the right direction.

“The Senate President is right on. Let’s get back to basics here and make our green goals the most cost effective and transparent they can be,” said Robert Rio, senior vice president for government affairs at Associated Industries of Massachusetts.

Bill Vernon, state director for the National Federation of Independent Business, said he needed to review the bill before commenting.

Rio last week worried that doubling the renewable energy requirement could have "serious negative consequences" for ratepayers. On Monday he said he was still reviewing the language on net metering and other provisions, but said, “Overall the bill is good.”

Senate President Therese Murray said the Senate plans to take up the bill on Thursday when it convenes for a full formal session. The bill also calls for rate increases of more than 10 percent to be smoothed over two years, and triples the net metering cap providing greater incentives for homeowners, businesses and government agencies to embrace solar and wind technology.

Murray, noting that Massachusetts and its New England neighbors have some of the highest energy costs in the country, said the state’s lack of domestic energy sources should not be an excuse for high prices.

“Storms last year and the recent transformer explosion in Boston earlier this month show that our investor owned utilities have a long way to go in delivering the quality service we should expect of utilities who currently serve established territories. That doesn’t mean we are powerless to do anything about prices,” Murray said.

Murray said she also hoped to see the House act on a bill currently before the House Ways and Means committee to simplify the process for cities and towns to create locally owned municipal electric companies, suggesting a similar provision could be added by the Senate through an amendment or by the House if and when they take up the new energy bill.

The muni electric bill cleared Downing’s committee earlier this session.

“By striking the right balance we will not only keep more jobs in Massachusetts, but we will create more jobs and we will be exporting solutions to the energy problems that many other states are facing,” Downing said. “The worst thing we could do right now is in the furtherance of simply reducing cots in the short term give up on those long term goals only to come back here in six, to eight to 10 years in a far deeper ditch than we are in now with far more expensive solutions to remedy the situation.”

In the case of a “significant shortfall of renewable generation,” the bill would also authorize the state to centrally procure renewable energy, and, if necessary, the transmission capacity to deliver the electricity.

Environment Massachusetts said tripling the net metering cap to 3 percent for private energy consumers and 6 percent for government agencies will allow more residents, municipalities and businesses to install small-scale solar and other technologies by shortening the time frame to earn back the initial investment through savings and rebates.

Essentially, homeowners and businesses that embrace renewables will be able to sell three times the amount of excess power generated on-site to the grid at retail, rather than wholesale prices. Supporters say net metering has contributed to installed solar electricity in Massachusetts increasing by 24 times the amount that existed in 2008.

Downing said 303 residential and business customers in the National Grid service territory participate in net metering programs. Downing did not immediately have numbers for the other utilities.

Rio, however, cautioned that more time was needed to analyzing the impact of increased net metering.

“Net metering is not free. It’s being paid for by the other customers in the area. We need to identify those costs and see if it makes sense,” he said.

Sue Reid, director of the Conservation Law Foundation Massachusetts, said incentivizing small scale renewable energy projects will also benefit all ratepayers by stabilizing the electricity grid and bumping the most expensive fossil fuels offline as more clean energy becomes available.

“Some regulators let fossil fuels off the hook when focusing on pure energy cost and ignoring the societal costs,” Reid said.

Reid said the Senate bill has “tremendous potential to build on the significant clean energy policies put in place in 2008,” but she said she also had some concerns about the lack of energy efficiency measures in the bill, as well as the accelerated rebate pilot program that would allow the five largest electric and gas users in each service territory to aggregate rebates for up to three year, totaling not more than 90 percent of what they’ve paid into the program.

She said, “We’re really looking forward to strengthening this bill and maximizing its potential.”

“We don’t see as much on the efficiency side and we have some concerns about allowing the largest customers to take their own participation and privatize it,” Reid said.