3/29/12 Bill S.2200 An Act relative to competitively priced electricity in the Commonwealth (with 58 amendments )

Please contact your state senator and the senate president now. Tell them:

S.2200 is an energy bill that will increase costs for consumers, strip revenue from towns, and hand unprecedented power to the governor to dominate the renewable energy market in Massachusetts and New England. 

The legislation being considered Thursday was written by the Patrick administration and goes a long way to achieving the governor’s astonishing goal.

Here are its main points:

S.2200 puts the state of Massachusetts itself in the energy business.

If there is not enough renewable energy in the New England market to meet our state’s ambitious mandates – and we already know there won’t be because all six states are competing for the same resources – then the Massachusetts Clean Energy Center will step into the market with contracts to buy renewable energy, primarily wind and solar, and to build new transmission anywhere in Massachusetts and New England. It will sell the electricity at wholesale prices into the grid, just like any other utility.

New transmission to meet our state’s renewable energy mandates is expected to cost billions of dollars. This means the bill will effectively put all the power to decide how much to spend and where to build transmission lines into the hands of one person, the governor. He appoints 10 of the 12 directors of the MassCEC.

The legislation will create long-term costly obligations for Massachusetts residents by allowing MassCEC to sign contracts of 20 years for renewable energy and 30 years for transmission.

S.2200 strips towns of the right to fully tax renewable energy properties.

The state’s Department of Revenue just ruled that towns can tax wind and solar facilities as real estate. The wind industry was furious and lobbied hard on this point.

Under this legislation, DOR’s ruling will be nullified. Instead, towns will be able to demand only 5% of the facility’s gross electricity sales as a payment in lieu of tax.
When you consider that a 10-turbine facility can be worth $40 million, but its output might be worth at best only $2 million annually, 5% or $100,000 of the latter would be a fraction of what would be obtained by the town otherwise.

S.2200 also increases costs to consumers by doubling the net metering cap from 3% to 6% of an electricity retailer’s peak customer demand.

This sounds like jargon but it is driving the renewable energy market.
Net metering allows wind and solar facility owners to sell renewable energy to the grid at retail prices, using town governments as go-betweens. The towns get a small cut and the owners get retail instead of wholesale value for their electricity.
Of course, this means that while towns may get a cut of the revenue, the utilities that by law must buy the electricity from them at retail prices will have to jack up the price of that electricity to the rest of us. So while your town government may benefit, you will pay the price.

S.2200 gives a 100% rebate for energy efficiency measures to the five largest electricity consumers in each utility service territory.

Those costs, which could be millions of dollars, will be borne by all other electricity consumers.

S.2200 calls for longterm contracts

On top of the requirement to meet the state’s renewable mandate (known as the RPS), which increases every year, under S.2200 electricity retailers must enter into long-term contracts for renewable energy, equal to 4% of the total energy demand from all their distribution customers. Since renewable energy costs anywhere from twice to five times as much as conventional fuels, this will also increase the cost of electricity for ratepayers.
For those long-term contracts, S.2200 establishes competitive bidding for renewables that qualify under the state’s Green Communities Act. The cost of transmission must be included in consideration of the bids. The effect of this will be hundreds of new wind turbines in Massachusetts. That’s because it will be cheaper to build hundreds of miles of new transmission lines inside our state then to build them over long distances outside the state.

Our message:

• Reject the governor’s power grab
• Delay a vote on the bill
• Conduct an independent study of all the costs
• Don’t put the state in the energy business
• Preserve the full taxing power of towns hosting wind turbines
• Seek other cheaper forms of renewable energy, like existing large-scale hydro

The wind industry applauds the work of the Patrick administration, so it is easy to tell who benefits from this bill.  According to the 2012 strategic plan of the American Wind Energy Association, “The Patrick administration wants to drive regional procurement plus a higher wind target (30%) for the state and the NE region.” (p. 149 of 259)