Posted by Brad MacDougall on Mon, Aug 06, 2012 @ 05:13 AM
Massachusetts lawmakers sent a flurry of mostly positive business-related legislation to Governor Deval Patrick last week to go with the initiative to control health insurance costs.
The House and Senate passed an energy bill, an economic development bill and a compromise “right to repair” bill in the final hours of formal legislative sessions Tuesday night. Legislators also advanced two measures opposed by AIM – one moving private child care providers into a union and an ambulance payment bill that would add $80 million in health care costs to businesses and consumers.
The governor signed the energy, economic development and child care measures last week. He is expected to approve the health care bill this morning.
Also significant were the bills that the Legislature elected not to approve, including a measure that would have mandated that employers provide seven sick days to workers. Lawmakers also declined to repeal or restrict non-compete agreements that protect the intellectual property of employers.
“The Legislature and Governor Patrick placed a premium on maintaining a business climate that encourages employers to create jobs,” said John Regan, Executive Vice President of Government Affairs for AIM.
“We do not agree on everything, but acknowledge that the governor and Legislature have balanced the budget without increasing taxes and wisely concentrated on issues that will help our unemployed fellow citizens get back to work.”
The flow of bills from the Legislature to the governor did not stop when formal sessions ended at midnight Tuesday. Lawmakers working during informal sessions on Thursday approved two expensive insurance mandates – one requiring insurance companies to cover hearing aids for all children and adults under age 21 and a second requiring coverage of treatment for cleft palates.
The bills of interest to employers include:
- Energy - The legislation includes a provision supported by AIM that would resolve inequalities under which commercial and industrial ratepayers have paid an increased percentage of total electricity costs despite using a declining share of power. The bill would also require utilities to procure competitively by 2016 an additional 4 percent, or 7 percent total, of their peak-load power needs from renewable sources through long-term contracts of 10 to 20 years. The annual payment for utilities entering into those long-term contracts for renewable energy would drop from 4 percent to 2.75 percent.
- Economic Development – The measure would improve the schedule for companies making estimated tax payments, authorize investments in research and development, provide tax-credits to start-up enterprises, and suspend the sales tax on the weekend of August 11-12. The measure also creates a $50 million fund to help local universities and nonprofit institutions compete for federal research and development money. Lawmakers removed a provision that would have expanded the bottle bill to non-carbonated beverage containers.
- Right to Repair - The final legislation protects trade secrets and intellectual property (IP). AIM’s objection to the initial bill was driven by language that would have threatened existing legal protections for IP and trade secrets. Because the legislation passed after the July 3 deadline, Massachusetts residents will still see the Right to Repair questions on the ballot in the November elections. To educate the public about this compromise, all parties that signed the agreement letter have agreed to run ads indicating that the measure is unnecessary.
- Child Care – The bill would move private-sector child care providers into a union collective bargaining unit. AIM considers the bill a clear and unprecedented intrusion by government into the private sector.
- Ambulance Payment - Overall added costs from this provision would be at least $80 million. The bill would codify this inequity with the practical effect of 300 percent of Medicare becoming the floor for all payments, while providing a disincentive for providers to contract with insurers at more reasonable rates. This is clearly contrary to the intent of cost-control efforts.
AIM opposed the cleft palate and hearing aid bills because they represent the latest in a steady stream of health insurance mandates that will exacerbate the health cost crisis for small employers. State-mandated benefits account for $1.3 billion or 12 cents of every dollar paid for health insurance.
“At a time when employers and the state are struggling with rising health care costs and the Legislature has passed payment reform legislation to contain the cost of health care, adopting new mandated benefits runs counter to those efforts,” Regan said.
Posted by John Regan on Mon, Jul 30, 2012 @ 07:56 AM
Beacon Hill lawmakers reached tentative agreement on an energy bill over the weekend, but a health cost measure and jobs bill important to employers remain unresolved as the Legislature races toward the end of formal sessions Tuesday at midnight.
The energy bill reported by a House-Senate conference committee includes a provision supported by AIM that would resolve inequalities under which commercial and industrial ratepayers foot an increasing percentage of total electricity costs despite using a declining share of power.
The bill would also require utilities to procure competitively by 2016 an additional 4 percent, or 7 percent total, of its peak-load power needs from renewable sources through long-term contracts of 10 to 20 years. The annual payment for utilities entering into those long-term contracts for renewable energy would drop from 4 percent to 2.75 percent.
The bill would separately give state regulators the power to determine whether a power-generation facility is needed in Salem.
Debate on the energy bill is scheduled for today.
“The rate rebalancing will lower costs over time for commercial and industrial electricity users,” said Robert Rio, Senior Vice President of Government Affairs at AIM.
“The conference committee has produced a balanced bill and we urge the full House and Senate to pass it.”
A separate conference committee working on a landmark bill to control the cost of health care had issued no report as of this morning. The House and Senate have passed differing versions of a measure designed to eliminate more than $150 billion in medical costs over 15 years by paying doctors for outcomes instead of procedures, closing the imbalance between low-cost and high-cost medical providers, and providing inter-operable electronic medical records by 2017.
AIM supports an aggressive cost-control target, calling upon the health care industry to reduce the growth of medical spending to two percentage points below overall state economic growth.
There has also been no word from lawmakers hammering out a jobs bill that would improve the schedule for companies making estimated tax payments, invest in research and development, authorize more than $1 billion in borrowing for energy efficiency investments, and provide tax-credits to start-up enterprises.
Posted by John Regan on Wed, Jul 18, 2012 @ 10:42 AM
Massachusetts lawmakers enter the final two weeks of the legislative session much like college students facing a final exam that counts for 50 percent of the grade.
House and Senate members have built up a solid GPA going into the final by freezing unemployment rates, balancing the budget without new taxes and rejecting a proposal to mandate paid sick time.
But the final grade for the 2011-2012 Beacon Hill session will be writ largely on the basis of two issues with the potential to affect the fortunes of Massachusetts employers for a generation – a bill to control the soaring cost of health insurance and a bill to ease electricity costs that are among the highest in the nation.
Both measures now sit in conference committees where legislators are attempting to hammer out differences between House and Senate versions before formal sessions end on July 31.
Passing the legislative final exam is fortunately more straightforward than that microbiology head-scratcher that ruined the end of your freshman year in college. Employers have drawn a clear roadmap about the steps legislators need to take to ensure that the Massachusetts economy continues to grow in a way that allows companies to create jobs and economic opportunity for the citizens of the commonwealth:
- Pass a health care cost control law that limits increases in medical spending to half a percentage point below overall economic growth. The law should also allow health insurance plans to negotiate separate arrangements with individual hospitals within a health care chain.
- Pass an energy bill that resolves rate inequalities under which commercial and industrial ratepayers foot an increasing percentage of total electricity costs despite using a declining share of power. The bill must not contain provisions that allow electricity distribution companies like NStar and National Grid to increase purchases of long-term contracts for power and renewable energy credits from renewable providers without a transparent competitive bidding process.
There are the two questions for the final. Take out your blue books. You have two weeks. Good luck.
Posted by Robert Rio on Thu, Jul 12, 2012 @ 08:51 AM
The Beacon Hill conference committee currently hammering out an energy bill has a once-in-a-generation opportunity to put Massachusetts on a path of energy independence without bankrupting ratepayers.
How? By crafting a bill that re-balances rate design and reforms a proposed requirement that utility companies purchase more of the long-term renewable power contracts that have already cost hard-working individuals and businesses billions of dollars on projects like Cape Wind.
The committee holds in its hands the power to jump-start a Massachusetts economy that has been saddled by the failure of the commonwealth’s centerpiece energy law – the 2008 Green Communities Act - to lower the cost of electricity. A balanced energy bill will ensure reliability and improve the bottom line of key Massachusetts industries that depend upon electricity, from traditional manufacturing to hi-tech data centers to municipalities, hospitals and universities
AIM and its member employers believe that the proposed Act Relative to Competitively Priced Electricity in the Commonwealth should enhance the parts of Green Communities that work and eliminate or reform those that do not. Our position reflects a belief that renewable generation based on sound market based economic principles can, unlike the current system, reduce prices while improving the environment and energy independence.
First, the good news. An Act Relative to Competitively Priced Electricity in the Commonwealth would resolve rate inequalities under which commercial and industrial ratepayers foot an increasing percentage of total electricity costs despite using a declining share of power. The proposed legislation would allow state regulators to allocate the cost of operating the electricity distribution system in proportion to the demand represented by each rate class.
Now the challenging part. AIM opposes sections of the bill that would allow electricity distribution companies like NStar and National Grid to increase purchases of long-term contracts for power and renewable energy credits from renewable providers without a transparent competitive bid process. Long-term contracts, negotiated in back rooms, have left consumers and employers stuck with a $3 billion bill for power from Cape Wind. Three-quarters of all contracts for long-term renewable power have been negotiated outside of competitive bidding at a cost some three times that of market-based renewable power.
The protections should include:
- Long term contracts must be competitive bid. There should be no option for individual negotiations outside the bidding process.
- There should be a defined cap on the amount of power that distribution companies are required to solicit.
- The allocation of above market or below market costs of the long-term contracts needs to be fairly distributed across customer classes with no one class subsidizing the others.
- Cost-effectiveness of long-term contracts should be defined clearly.
- There should be no other options for long-term contracts other than those specifically approved under this law
AIM also believes a section of the bill that requiring long-term contracts with new gas generating plans at the locations of existing coal or oil fire plants would harm consumers.
The prohibitive cost of energy is one of the key reasons that Massachusetts fell from sixth to 28th this week on CNBC’s annual ranking of the Best States for Business. The energy conference committee can help to restore the commonwealth’s ranking by taking real steps to reduce the cost of electricity in the Bay State.
Posted by Christopher Geehern on Fri, May 11, 2012 @ 01:44 PM
Attorney General Martha Coakley said today that Massachusetts has a “unique opportunity” to lead the nation in controlling health care costs, much as it led the nation six years ago in expanding health care coverage.
Coakley told more than 500 employers at the AIM Annual Meeting in Waltham that changes in the health care market and pending health reform legislation on Beacon Hill both provide hopeful signs that the commonwealth will limit rising health premiums. She stressed, however, that reform will not succeed unless employers and workers become engaged in the process and make themselves knowledgeable consumers of health care.
“We need you to have more skin in the game and make sure you understand what your investment is and what you are paying for in a competitive market,” said Coakley, whose two studies of the health care market highlighted the cost imbalances caused by the market power of large hospitals.
“The goal is to make sure people can make the choices for coverage and health care that work for them.”
Coakley spent much of her keynote address discussing health care and electricity, both of which represent major cost disadvantages for Massachusetts employers. She said the objective with electricity is to obtain the long-term economic benefits of clean energy while managing the short-term increase in the cost to develop renewable energy sources.
She said that she has worked with AIM and the Legislature to support three major changes to the commonwealth’s energy policy:
- Ensure that long term electricity contracts are competitively bid;
- Eliminate sweetheart financial incentives; and
- Develop renewable energy on a technology neutral basis.
She also reported that her office is seeking to simplify consumer energy bills to give consumers a clear idea of what they are buying.
The attorney general’s address capped a meeting that emphasized the role of education in the economic future of Massachusetts.
A panel of business executives and state education officials earlier told the audience that Massachusetts employers will ensure their own competitiveness by helping students attain the academic background and applied skills they need either to attend college or go into the work force.
The panel maintained that companies must clearly articulate their business strategies and the skills workers need to he
“How many of us are willing to say we are in this for the long term?” said Angelo Sabatalo, Corporate Director of Operational Training and Development at NYPRO Inc. in Clinton.
Maura Banta of IBM Corporation, Chair of the Massachusetts Board of Elementary and Secondary Education, said a task force of the board is looking at strategies to improve the way schools prepare students to enter the workforce.
“It’s a very exciting process and project,” Banta said.
Posted by Robert Rio on Wed, Feb 15, 2012 @ 02:48 PM
NSTAR’s agreement to purchase power from Cape Wind to facilitate the utility’s merger with Northeast Utilities should create savings for ratepayers in the short term, but those savings will likely be offset in the long term by the staggering cost of the offshore wind project.
State officials announced a settlement agreement this afternoon under which NSTAR will purchase 27.5 percent of Cape Wind power, likely the most expensive ever generated in Massachusetts.
The agreement, negotiated outside of public debate, is expected to pave the way for state approval of the proposed merger of NSTAR with Connecticut-based Northeast Utilities.
If approved by the state Department of Public Utilities, the negotiated settlement would freeze the base distribution rates for four years, benefitting customers of the merging companies – NSTAR Electric, NSTAR Gas and Western Massachusetts Electric Company (an NU subsidiary). It would also provide a one-time customer rate credit of $21 million for residential customers of the three companies – an amount that equals half of the estimated four-year savings the companies expect to net from the merger.
The settlement also requires the two utilities to restructure existing rates in the Western Massachusetts Electric service territory that currently result in commercial and industrial customers paying significantly more than the actual cost to serve them.
AIM has opposed power agreements with Cape Wind because the project's cost will burden employers who already pay among the highest electricity costs in the nation. The average electricity price in the U.S. for industrial customers in July 2011 was 7.39 cents per kilowatt hour (kWh) versus 13.87 cents for Massachusetts manufacturers.
National Grid has already committed to purchasing half of the power from Cape Wind. The Cape Wind/National Grid agreement was the first to be approved under a provision of the Green Communities Act that allows utilities to sign long-term contracts for renewable power directly with generators.
The Massachusetts Supreme Judicial Court in December rejected an appeal by AIM of the commonwealth’s approval of the National Grid deal.
Under terms of the proposed settlement, if Cape Wind does not commence “physical construction” (i.e., installation of equipment or materials into the seabed) before December 31, 2015, NSTAR can opt to terminate its power purchase contract with the wind farm. If that occurs, NSTAR agrees to solicit contracts no later than June 30, 2016 to purchase an equivalent amount of power (equal to 2 percent of the company’s total load) from new renewable energy resources qualified under the Massachusetts Renewable Energy Portfolio Standard for Class I renewables.
AIM is disappointed that a merger that would have been good for the ratepayer was basically used as an excuse to force the companies to purchase the highest-priced renewable power in Massachusetts history.
Recent competitively bid contracts have shown that renewable power can be purchased for one-third the price of Cape Wind AIM will review the agreements in detail to assess their full impact on employers.
Posted by John Regan on Fri, Jan 20, 2012 @ 07:38 AM
Associated Industries of Massachusetts (AIM) last week released Common Wealth 2012, its statement of the principles and beliefs that will guide Bay State employers on public policy issues during the New Year.
AIM engages in policy work on behalf of some employers who provide jobs to 650,000 Massachusetts residents. We do so guided by the belief that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.
Given that objective, what are AIM’s specific public policy priorities on behalf of Massachusetts employers for 2012?
- Reduce the cost of health insurance by supporting adoption of alternative methods to pay medical providers and by encouraging employer and consumer engagement.
- Address high electricity costs in Massachusetts and any burdensome state regulations that drive those costs.
- Secure a one-year or multi-year freeze in Unemployment Insurance rates and implement long-term structural changes in the UI system
- Oppose anti-growth proposals such as paid family leave and mandated sick leave.
- Support efforts to ensure that Massachusetts maintains globally competitive schools and workforce development programs.
- Repeal the restrictive Massachusetts definition of Independent Contractor and adopt the federal definition.
- Amend the mandatory treble damages law to apply only to willful violations of the Massachusetts Wage & Hour statute.
- Retain existing legal protections for intellectual property, especially the use of non-compete agreements.
- Continue predictable, responsible and long-term state fiscal policy.
AIM looks forward to working with the Patrick Administration and the Legislature during 2012 to create an environment to encourage the ingenuity and entrepreneurial energy that has historically driven the Massachusetts economy. AIM stands for jobs, economic opportunity, fiscal predictability, business formation, innovation, education, and a government that acknowledges that the private sector has the unique ability and responsibility to create the Common Wealth for the people of Massachusetts.
Posted by Robert Rio on Wed, Dec 28, 2011 @ 09:44 AM
The Massachusetts Supreme Judicial Court (SJC) today upheld the commonwealth’s approval of a power-sales agreement between National Grid and Cape Wind that will require thousands of employers to pay the highest power price ever negotiated in Massachusetts.
The ruling rejects arguments by Associated Industries of Massachusetts that the power sales agreement violates state law by forcing employers in Grid’s service territory to pay for Cape Wind power even if they do not use it. The SJC also ruled that the Massachusetts Department of Public Utilities had the authority to approve the 15-year deal, even though National Grid did not seek competitive bids.
The SJC, in an opinion written by Justice Margot Botsford, ruled that while the Massachusetts Green Communities Act does not explicitly address the authority of state regulators to approve cost-recovery methods for renewable power, “it is well established that the (Massachusetts Department of Public Utilities) has the statutory authority to rule on the appropriateness of proposed cost-recovery formulas.”
“(T)he department's decision in this proceeding is not precluded by the fact that the proposed cost recovery method is novel, particularly in light of the new emphasis on development of renewable energy in the (Green Communities Act)… The department permissibly determined that the environmental benefits of (the power purchase agreement) … will accrue to all National Grid customers, and it is therefore appropriate to require all customers to share in the costs of acquiring these benefits, in accordance with departmental precedent,” the court said.
Richard C. Lord, President and Chief Executive Officer of AIM, said the association respects the ruling of the court but is disappointed with the outcome.
“We continue to maintain that state regulators fell short of their responsibilities to consumers by approving this agreement at a time when other utilities were finding plentiful renewable electricity at less than half the cost of Cape Wind."
Massachusetts employers already pay among the highest electricity rates in the nation. According to the Department of Energy Information Administration (EIA), the average electricity price in the U.S. for industrial customers in July 2011 was 7.39 cents per kilowatt hour (kWh). The average price in Massachusetts was 13.87 cents per kWh, the highest rate in the continental United States.
The Cape Wind/National Grid agreement was the first to be approved under a provision of the Green Communities Act that allows utilities to sign long-term contracts for renewable power directly with generators. Other Massachusetts utilities such as NSTAR have since negotiated renewable power contract for much less than the 25 cents per kWh average cost of the National Grid/Cape Wind agreement.
The cost difference stems primarily from the fact that National Grid chose to negotiate with Cape Wind individually, outside a competitive bidding process, while NSTAR and the other utilities chose to bid their renewable power requirements competitively for generation anywhere in New England.
The legal challenge that AIM filed on behalf of employers and others was based upon three broad arguments:
- National Grid’s allocation of the above-market costs of Cape Wind to ratepayers is inconsistent with the law and harms ratepayers on competitive energy supply;
- The amount of the Power-Purchase Agreement exceeds 3 percent of total electricity demand in the National Grid territory and therefore exceeds the legal cap on the amount of renewable power utilities must purchase through long-term contracts; and
- The National Grid/Cape Wind contract was not competitively bid.
The first issue was the most important for AIM member employers. National Grid has chosen to allocate the $1 billion in above-market costs of Cape Wind to all customers, even though the power will be funneled only to the customers who buy electricity from National Grid. That means businesses that buy power on the competitive market to help moderate their costs will be forced to pay extra money - tens of thousands of dollars in some cases – for power they do not use, essentially making them pay twice for electricity.
Posted by Robert Rio on Fri, Dec 02, 2011 @ 09:21 AM
Editor’s note – AIM Senior Vice President Robert Rio wrote an article in this space Monday about the fact that a rare political consensus is developing on Beacon Hill around the need to address the staggering cost of electricity in Massachusetts.
Rio’s article was later posted by Commonwealth magazine, where it drew a response from Lisa Capone, Assistant Secretary for Communications and Public Affairs at the Massachusetts Executive Office of Energy and Environmental Affairs. Rio’s subsequent article appears below.
AIM appreciates substantive debate on issues as important as the high cost of energy in Massachusetts. But the recent posting in Commonwealth magazine by Assistant Secretary Lisa Capone is disappointing in its grasp of the issues.
Ms. Capone attempts to rebut arguments that AIM never made in its November 28 article Consensus Emerges on Need to Address Massachusetts Electricity Costs. Her ad hominem representation of AIM’s position on numerous issues is false. And the “facts” she cites are either incorrect or verify our initial points.
Ms. Capone spends an inordinate amount of time accusing AIM of flip-flopping in our support for energy efficiency. The only problem is that the November 28 AIM article was not about energy efficiency, but about state-mandated programs of questionable benefit diverting money out of the productive economy.
For the record, AIM has been clear and consistent in its support of energy efficiency. We stated in our recent testimony before the Joint Committee on Telecommunications, Utilities and Energy, that we support a vibrant, cost-effective energy efficiency program. We may debate the actual monetary benefit of energy efficiency versus its cost, but all energy should be used wisely and we are proud to be a leader in supporting cost-effective energy efficiency programs.
While efficiency measures create measurable results, the same cannot be said of other programs developed under the Massachusetts Green Communities Act, including net metering, long-term contracts for renewable energy, smart grid, additional RPS categories, utility owned solar and solar carve outs. These programs are either of questionable benefit or run so inefficiently and without any accountability or review that their added costs will wipe out any benefit from energy savings.
These are the programs that contribute unnecessarily to the $4 billion of additional costs that Attorney General Martha Coakley, the statutory ratepayer advocate, cited in testimony on Beacon Hill. The Massachusetts Division of Energy Resources (DOER) does not dispute the attorney general’s numbers.
AIM supports cost-effective, competitively bid renewable projects and other programs that demonstrate real results at the least cost to ratepayers.
Ms. Capone’s claims about impressive job gains in the so called “clean-energy sector” - a rhetorical sleight of hand suggesting that industries that don’t fit the administration’s political agenda are somehow “unclean” - prove AIM’s point about the problem of government picking winners and losers. Could it possibly be that the anemic growth in the so called non-clean energy sector cited by Ms. Capone is partly due to the imposition of more than $1 billion worth of electricity cost increases under Green Communities in order to transfer it to favored sectors of the economy? Clean-energy jobs are not being created - just transferred.
Massachusetts deserves an energy policy that treats all ratepayers and companies equally. A diverse economy is more sustainable than one based on government-imposed cross subsidies.
Massachusetts has the highest electricity prices in the nation, almost double the average rate for industrial users, despite the promises that these programs reduce rates. Even a recent 40 percent decline of the cost of natural gas, a key fuel for electricity generation, failed to lower electric rates in Massachusetts. The only way to address the problem is through rigorous, cost-effective, transparent and competitively bid projects and policies that put the consumer first.
These standards benefit all members of the Massachusetts economy. They will bring jobs to all regions of the state, create stable or lower electricity costs and result in more renewable energy being built in Massachusetts.
AIM calls upon the commonwealth to take the following actions:
- itemize and maintain a list to share with ratepayers of all added costs for every program instituted since the Green Communities Act was signed;
- project these costs out over three years;
- update bill impacts for Cape Wind (now almost triple the original estimate).
Such reporting would allow consumers and employers to debate the merits of each program. Open debate would bring certainty to ratepayer planning, and credibility to the commonwealth. Absent the data, we are left with a government that appears to want to maintain the status quo and marginalize anyone who questions their agenda.
Posted by Robert Rio on Mon, Nov 28, 2011 @ 07:45 AM
“There are compelling reasons to support the development of offshore wind and solar projects, but requiring them to compete with onshore wind on the basis of price would undermine this development.”
Ann Berwick, Chair
Massachusetts Department of Public Utilities
A rare political consensus is developing on Beacon Hill around the need to address the staggering cost of electricity that has long suppressed economic growth in Massachusetts.
Attorney General Martha Coakley, Senate President Therese Murray, House Speaker Robert DeLeo, AIM and scores of Massachusetts employers have all expressed remarkably similar messages in recent weeks about the need to create much-needed relief for consumer and employer electric bills.
AIM invites DPU Chair Berwick and the Patrick administration to join that consensus. The formula for relief on energy prices in Massachusetts should be a state energy policy that is technology neutral, transparent, and based on a competitive bidding process that ensures the best possible prices for end users.
The stakes could not be higher for Massachusetts employers. Electricity price increases caused by the commonwealth’s primary renewable energy policy – the 2008 Green Communities Act - are discouraging job creation, driving companies to other states and inhibiting the weak economic recovery in Massachusetts.
According to the Department of Energy Information Administration (EIA), the average electricity price in the U.S. for industrial customers in July 2011 was 7.39 cents per kilowatt hour (kWh). The average price in Massachusetts was 13.87 cents per kWh, the highest rate in the continental United States.The difference for commercial customers is about 35 percent, with Massachusetts the third highest.
Attorney General Coakley told a Beacon Hill hearing two weeks ago that the Green Communities Act will add $4 billion to the electric bills of Massachusetts employers and residents over the next four years.
Coakley said that electricity costs in Massachusetts – already some of the nation’s highest – will continue to rise over the next decade, warranting a review of some of Green Communities Act provisions that encourage investment in expensive technologies and give utility companies “overly generous” incentives to hit efficiency targets set by the law.
Coakley also recommended that long-term renewable energy contracts be competitively bid, a position long taken by AIM in its objection to the power sales agreement between National Grid and Cape Wind. The position is at odds with that taken by Berwick, the state’s top utility regulator, who said competitive bidding could discourage offshore wind and solar power development.
Meanwhile, Senate President Murray wasted no time after the conclusion of formal legislative sessions for 2011 to confirm that the Senate will address the high cost of energy next year. She named Senator Benjamin Downing of Pittsfield, co-chair of the Committee on Telecommunications, Utilities and Energy, to lead the initiative.
“Does the regulatory regime that we have set up right now meet the needs of ratepayers in the best way possible?” Downing told State House News Service. “There are a lot of issues that fall under that. It’s a broad conversation that we’re having.”
AIM applauds the Legislature for addressing energy costs and offers several basic principles to guide the review:
- Put the consumer first. Consumers in Massachusetts should be the primary beneficiaries of energy policy, not developers, marketers, brokers, or other stakeholders seeking to benefit their bottom lines.
- Ensure that all programs are subject to rigorous cost-effective standards and, where possible, require that they be implemented at the least cost to consumers. Massachusetts is making a massive investment in renewables and energy efficiency under Green Communities, and we should hold these programs up to strict standards for evaluating whether they are cost effective.
- Ensure that legislative or regulatory goals are economically sustainable and open to review and adjustment. Legislative targets for the development of certain technologies and for certain environmental goals are important, but should be dynamic and subject to periodic evaluation and adjustment depending on economic conditions.