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Governor, Business Community Reach Compromise on Health Assessment

Posted by Katie Holahan on Jun 20, 2017 2:00:00 PM

The Massachusetts business community has agreed to support a broad compromise plan to stabilize the Massachusetts Medicaid and Unemployment Insurance systems while offseting a two-year employer health-care assessment with savings elsewhere.

Baker.2017.jpgThe complex agreement, developed after months of intensive negotiations between the Baker Administration and the business community, would make structural changes to the MassHealth program to reduce ongoing financial shortfalls in the state/federal insurance program for low-income people. There would also be cost-saving changes to the commercial health-insurance markets, including increased incentives for patients to seek care at high-quality community hospitals.

The plan would use a temporary employer health assessment as “bridge financing” to capitalize the MassHealth program until the long-term reforms are implemented. The assessment would raise $200 million annually through the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan.

The assessment would be offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

The administration announced the agreement today in a letter to the chairs of the Legislature’s Joint Committee on Ways and Means.

“The comprehensive plan moderates the employer assessment that was originally proposed in January while offering the opportunity for meaningful structural reforms to the health insurance system and rate relief within the Unemployment Insurance system,” said Richard C. Lord, President and Chief Executive Officer of AIM.

The compromise will require approvals both from the Massachusetts Legislature and from federal officials.

Here are the key elements of the agreement:

MassHealth/Medicaid

  • Moves 140,000 people who are above the federal poverty level out of Masshealth and into the Connector market;
  • Restructures MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Shifts 30,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into Careplus, which does not;
  • Adds co-pays for MassHealth members;
  • Requires the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered affordable health insurance by an employer from seeking coverage through MassHealth.

Commercial Market Reforms

  • Imposes a five-year moratorium on insurance mandates (requires change to state law);
  • Increases the required premium differential for tiered network plans from the current 14 percent to 28 percent. (requires state law change);
  • Promotes transparency tools for employers and consumers. (requires state law change);
  • Increases access to lower-cost providers by expanding the scope of practice for optometrists, podiatrists and advanced practice registered nurses (APRN) and creating a new mid-level provider - dental therapists. (requires state law change).

Employer Assessment:

  • Applies to employers with six or more employees (both full and part-time);
  • Increases the EMAC contribution rate for all employees, statewide. Additional annual two-tiered assessment on any employees receiving health insurance through public programs.
  • Tier 1 is broad based, raising the current EMAC rate from 0.34 percent to 0.51 percent of annual wages, up to the annual wage cap of $15,000. Applies to all employers currently subject to EMAC; raises the maximum per-employee contribution rate from $51 to $77; state expects to annually collect $75M under this tier;
  • Tier 2 introduces a targeted payment that would require employers to pay an additional 5 percent of annual wages for each non-disabled employee on public coverage, up to the annual wage cap of $15,000; applies to all employers currently subject to EMAC with non-disabled employees on MassHealth (not in premium assistance) or subsidized Connector coverage (ConnectorCare); Tier 2 would result in an annual maximum per employee contribution rate of $750; state expect to collect an estimated $125M in Fiscal Year 2018 under this tier; the estimate is dependent upon the actual number of individuals on public coverage.
  • Waiver applies for anyone receiving insurance through parent, spouse or other household member;
  • Implementation date of January 1, 2018 and a sunset date two years later.

Unemployment Insurance

  • An automatic increase of three levels to schedule F due to take effect on January 1 would be replaced with a one-level jump to schedule D for 2018 and another single increase to schedule E for 2019.

Governor Baker in January proposed to close a $600 million shortfall in MassHealth by levying a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, or do not make a minimum contribution of $4,950 annual contribution for each full-time worker. AIM opposed that plan because it would penalize the majority of companies that provide good health insurance to their workers.

Topics: Controlling Health Care Costs, Charlie Baker, Employer Health Assessment

Governor Baker Addresses AIM Annual Meeting

Posted by Christopher Geehern on May 12, 2017 12:19:02 PM

Governor Charlie Baker delivered the keynote address at the 2017 AIM Annual Meeting last week in Boston. The governor reviewed the accomplishments of his administration and ended with a passionate plea for bipartisanship.

Here is his full speech...

Topics: AIM Annual Meeting, Massachusetts economy, Charlie Baker

Governor Makes Case for Bipartisanship

Posted by Christopher Geehern on May 8, 2017 10:11:59 AM

Governor Charlie Baker, speaking one day after a health-care bill once again passed the US House of Representatives without a single vote from the minority party, made a passionate case for bipartisanship in a speech to the AIM Annual Meeting Friday.

Baker.2017.jpg“In the end, you’re not measured by how many things you opposed but how many things you get done,” the governor told more than 850 business leaders gathered at the Westin Boston Waterfront hotel.

“I take tremendous satisfaction from the fact that we get along with people on both sides of the aisle.”

Governor Baker has worked closely throughout his first two years in office with the two top Democrats in the Massachusetts Legislature – House Speaker Robert DeLeo and Senate President Stan Rosenberg – on complex issues ranging from the MBTA and energy policy to the opiate crisis. The bipartisan approach has made the governor the most popular chief executive in the nation, according to polls.

“I’ve learned a lot from people I don’t agree with,” said Governor Baker, who said his entire staff prides itself on listening to ideas from throughout the ideological spectrum.

The governor’s speech highlighted an Annual Meeting celebration that featured presentation of 2017 AIM Vision Awards to Fidelity Investments, Bright Horizons Family Solutions and Woods Hole Oceanographic Institution. AIM also presented the John Gould Education and Workforce Development Award to Tech Foundry of Springfield.

Governor Baker highlighted several bipartisan initiatives he said have been cornerstones of his administration:

  • Strengthening communities, including a $300 million funding increase for k-12 education, development of a second-generation MCAS test, $800 million for local roads and bridges and an initiative under which cities and towns can share best governing and management practices.
  • Economic growth, including a broad regulatory review, a multi-million-dollar investment in vocational/technical schools, streamlining of mass transit systems and an energy bill that maintains costs while reducing the commonwealth’s carbon footprint.
  • Improved efficiency, including reduced wait times at the Registry of Motor Vehicles and an overhaul of the Health Insurance Connector Authority, which broke down several years ago as residents were attempting to buy insurance.

Bipartisan cooperation, the governor said, was one of the primary reasons that General Electric Company chose to locate its corporate headquarters in Boston. The company has often cited the collaboration between the Republican Baker and Boston Mayor Marty Walsh, a Democrat, as a factor in its decision to move from Connecticut.

Governor Baker praised the work done by AIM to represent the interests of employers in public-policy debates.

He praised the association for its willingness to “speak candidly and straight about issues it cares about.”

Topics: AIM Annual Meeting, Massachusetts, Charlie Baker

Proposed Assessment Will Hurt Employers Who Provide Health Insurance

Posted by Rick Lord on Jan 26, 2017 3:00:40 PM

Governor Charlie Baker yesterday described his proposal for a $300 million health assessment on employers as an attempt “to wrestle with the fact that a huge portion of people who are working full-time are either not taking coverage that's available through their employer and going on MassHealth, or are working for people who aren't offering them coverage at all, and going on MassHealth."

health_care.jpgHe added, according to State House News Service, that “the centerpiece of this budget really is a smart and common-sense approach to address the problem of costs being shifted from private sector employers for their employees onto state government."

Set aside for the moment the questionable premise of rampant cost shifting in a commonwealth where 76 percent of employers offer health insurance compared to 55 percent in the rest of the country.

The important point is that the governor’s sweeping proposal goes far beyond targeting employers who offer no health insurance, and instead penalizes employers who already offer high-quality insurance coverage to their employees.

It appears that money, not fairness, is driving the new fair-share assessment.

The administration plan would impose a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.

The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with federal health-care reform.

AIM asked multiple employers of varying sizes to determine whether they would be subject to an assessment under the governor’s plan. Every one of the companies, from small manufacturers to international financial institutions to corner retailers, reported that they would face assessments. Most fell short of the 80 percent threshold because of employees using spousal health plans or because of the calculation of full-time equivalent employees.

“There is widespread concern among responsible employers that they are being dragged into an assessment intended for companies that provide no health coverage,” said Katie Holahan, Vice President of Government Affairs at AIM.

Holahan said AIM has developed an online calculator that will allow employers to determine how much they might owe under the governor’s proposal.

AIM opposes the employer assessment because the growing shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act (ACA), a law that may well be repealed by the time Massachusetts solves its Medicaid problems. 

ACA made access to health insurance an entitlement based on expanded income eligibility.  Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth.  The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  ACA made it an economically rational choice for eligible residents.

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years - the high cost of health care coverage in this state threatens the underpinnings of the state economy.  This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.

AIM looks forward to working with the administration and the Legislature to find a fair solution to the commonwealth’s challenging health-care financing issues.

Topics: Health Care Costs, Health Insurance, Charlie Baker

Infographic: The Governor's Proposed Health Assessment

Posted by Katie Holahan on Jan 25, 2017 4:21:34 PM

The Baker Administration filed a budget proposal today that, as expected, would impose a $2,000-per-employee tax on some employers to close a deficit in MassHealth. AIM opposes the assessment as unfairly burdening employers for a problem they did not create.

Which employers will be subject to the assessment? Here is an infographic that summarizes the administration proposal. AIM is developing a calculator that will allow employers to determine exactly what their costs will be under the new assessment.

If you have any feedback or questions about this proposal, please contact Katie Holahan at keh@aimnet.org or 617.262.1180.

Fair Share 2017.jpg

 

Topics: Health Care Costs, Health Insurance, Charlie Baker

Trade Mission Cements Economic Ties with Israel

Posted by Kristen Rupert on Dec 22, 2016 11:03:34 AM

Editor's note - Kristen Rupert, Executive Director of the AIM International Business Council, traveled to Israel earlier this month as part of Governor Charlie Baker's trade mission.

Governor Charlie Baker’s recent trade mission to Israel took place at a propitious time for US-Israel relations.

Gov.Baker.Israel.jpgThe first two (of an order of 50) F-35 fighter jets were delivered by the US to Israel while the Massachusetts trade delegation was participating in meetings in Tel Aviv.  These state-of-the-art, manufactured-in-the-US, stealth aircraft were flown from the US to an Israeli airbase in the Negev where they were greeted by Israel Prime Minister Benjamin Netanyahu, US Defense Secretary Ash Carter, US Ambassador to Israel Daniel Shapiro, and a large crowd of US and Israeli military personnel.

Against this backdrop of goodwill between the US and Israel, Massachusetts executives spent four days in panel discussions, informational briefings and networking sessions with Israeli counterparts in the digital health and cybersecurity sectors.  A few examples:

Two panels on cybersecurity, featuring chief security, tech and information officers from Harvard, the Federal Reserve, Raytheon, IBM, Akamai and Beth Israel Deaconess, addressed the challenges of staying ahead of the “bad guys.”  Lessons learned: think of cybersecurity as an investment and not a cost for your company, continue to add security features for log-ins and data access, and communicate regularly to employees—nearly all of whom carry a mobile device—about the critical importance of protecting company and personal data.

On research and innovation, Governor Baker and Israel’s Chief Scientist spoke at a half-day session, convened by GE, about complementary strengths in Massachusetts and Israel.  Both leaders spoke about the value of collaboration among government, private industry, and universities.  Massachusetts is historically strong in technology and our defense legacy is helping us grow a cybersecurity ecosystem.  Israel spends more per capita on research and development than any country in the world and the government funds start-ups in all industries at all stages.  Both Israel and Massachusetts have strong talent pools from which to hire—yet both are struggling with the need for additional skilled workers.

Governor Baker stressed the “powerful possibilities” of collaboration between the Bay State and Israel.  Strong ties already exist.  Many Israeli doctors and health-care researchers trained or practiced in Massachusetts.  More than 200 Israeli-founded companies are thriving in the Boston area.  Thrice-weekly non-stop flights between Boston and Tel Aviv already carry university professors, students on internships, private industry leaders, medical professionals and government officials.

Several Memoranda of Understanding focused on cybersecurity and technology were signed by Massachusetts government officials and their Israeli counterparts during the trip.  Now back home, trade mission delegates are already talking about how to launch and nurture additional collaborations and encourage Israeli start-ups to come to Boston.

Governor Baker said it best when he invited company founders to consider Massachusetts “your home away from home.”  Certainly the recent trade mission reinforced the strong desire by Israelis and Bay Staters to work even more closely together over the next few years.    

Topics: International Trade, AIM International Business Council, Charlie Baker

Governor Pitches Massachusetts to Israeli Entrepreneurs

Posted by Kristen Rupert on Dec 12, 2016 9:06:18 AM

Governor Charlie Baker and Massachusetts business leaders are using their current trade mission to Israel to broaden the already close economic ties between that nation and the commonwealth in key areas such as cybersecurity and digital health.

Baker in Israel.jpgBaker, reflecting on the common values and strengths shared by the Bay State and Israel—technology, innovation, intellectual intensity—is encouraging Israelis to think of Massachusetts as their “home away from home.” 

Nearly a dozen AIM member companies, including Raytheon, Eversource, Beth Israel Deaconess Medical Center (BIDMC), Harvard, IBM, GE, UMass, Blue Cross Blue Shield, Goodwin, Sanofi and Cyberark, are participating in the economic development mission to Tel Aviv and Jerusalem.

Today, several dozen Israeli entrepreneurs planning to expand into the US in the next 24 months indicated strong interest in selecting Massachusetts as the destination for their young firms.  Their demonstration of enthusiasm occurred at the US-Israel Growth Summit at Tel Aviv University, which was sponsored by Raytheon and attracted nearly 300 Israeli business leaders.   To encourage the Israelis to choose the Bay State over Silicon Valley or New York City, a panel of four Massachusetts-based Israeli-founded company executives, including AIM member CyberArk CEO Udi Mokady, shared why they moved their businesses to Boston. 

Why is Boston so attractive to Israeli entrepreneurs?  Talent, customer access, a strong tech ecosystem, research capabilities, reasonable time difference between Boston and Israel, and cultural fit.  In fact, more than 200 Israeli-founded businesses can be found in Massachusetts today, with more than 9,000 direct employees and more than $9 billion in direct economic impact.  The number of Israelis living in and around Boston exceeds 200,000.

Massachusetts executives also have a lot to learn from Israeli counterparts, especially in the areas of cybersecurity and digital health.  Yesterday’s agenda included a visit to Israel cybersecurity firm Team8, comprised of former officials of Israel’s elite military unit known as 8200.  The company’s CEO/co-founder emphasized that the best way to approach cybersecurity challenges is to understand the psychology of the people behind the malware and attacks. 

Meetings between and among Massachusetts and Israeli government and industry leaders this week have been productive. Discussions are underway about possible collaborations, partnerships, student exchange programs, internships and investments that will benefit Israeli and Massachusetts companies.

One such collaboration was announced today when Massachusetts and an Israeli company formally agreed to work together on cybersecurity research, training and academic exchanges. The Massachusetts Technology Collaborative and the Israeli non-profit private organization CyberSpark signed a memorandum of understanding, pledging that the organizations would collaborate on research focused on healthcare technology cybersecurity and practical training in cybersecurity for American and Israeli students.

Topics: International Trade, Charlie Baker

Baker: Israel Mission to Emphasize Cybersecurity, Digital Health

Posted by Kristen Rupert on Oct 6, 2016 3:50:22 PM

The upcoming Massachusetts trade mission to Israel will emphasize cybersecurity and digital health, two industries in which Governor Charlie Baker says the commonwealth has an opportunity to become a powerful worldwide player.


International2016.jpgBaker told more than 150 business leaders and diplomats at the 2016 AIM Global Trade Symposium this morning that cybersecurity and digital health are related because digitally driven insulin pumps and other medical devices must be invulnerable to software hackers.

“Cybersecurity will become the prerequisite for digital health,” Baker said during a keynote speech at Gillette Stadium in Foxboro.

“When we get onto the idea of medical devices designed to monitor health status…the whole idea of breach in something like that is not a shrug-the-shoulders kind of moment.”

The governor said Massachusetts remains well positioned to increase exports because of significant upgrades to the infrastructure for moving products from the Bay State to overseas destinations by sea and by air. He noted the expansion of direct overseas flights at Logan International Airport, the dredging of Boston Harbor, and the expansion of the Connelly Terminal in Boston as important steps to ensure that Massachusetts employers will continue to have access to foreign markets.

The AIM Symposium honored three Massachusetts companies with Global Trade Awards for excellence in international business - REXA of West Bridgewater, L-3 Security & Detection Systems of Woburn, and Riverdale Mills Corporation of Northbridge.

“International trade plays a pivotal role in the health of the Massachusetts economy” said Richard Lord, President and CEO of AIM.

“That is why we are delighted to honor the achievements of these local winners, who set the standard for global business. These firms are making a significant contribution to Massachusetts’s reputation as a world trade leader. ”

Employers and academics at the Symposium agreed that uncertainty hangs over international commerce in the form of a strong dollar, weakness in key export markets, the impending exit of the United Kingdom from the European Union and a rising tide of protectionism both in the U.S. and abroad. Several companies reported that the rising dollar and falling shipping costs are bringing new, low-cost competitors into many overseas markets.

“The uncertainty level has certainly gone up in the past several years,” said, Ravi Ramamurti, Distinguished Professor, Northeastern University’s D’Amore-McKim School of Business, who led a panel discussion on “Tough Times for Trade.”

He added that the slowing growth in Europe and Asia appears to be structural rather than cyclical in nature.

The effects of currency shifts and other factors vary widely depending on industry, geography and the ability of a particular business to adapt.

“Volatility creates opportunity,” said Charlie Cunnion, Director of Global Transportation for International Forest Products LLC, the largest exporter in New England.

“When things are difficult, that’s when we shine the best,”

Topics: International Trade, AIM International Business Council, Charlie Baker

AIM-Member Employers Join Governor's Economic Panel

Posted by John Regan on Oct 7, 2015 2:27:46 PM

The chairman of the Associated Industries of Massachusetts Board of Directors yesterday joined more than a dozen other AIM members as part of a council that will help the Baker administration develop a long-term economic plan for the commonwealth.

Kenary2-15Daniel Kenary, chief executive officer and co-founder of the Harpoon Brewery who took over as chair of AIM in May, will formally represent the association on the governor’s Economic Development Planning Council. The council, chaired by Secretary of Housing and Economic Development Jay Ash, must submit its economic plan to the Legislature by the end of the year.

“The Planning Council offers an opportunity for engagement with business, public, and non-profit sector leaders on a wide range of economic development priorities and programs,” said Governor Charlie Baker. “Their invaluable experience will help guide our planning and implementation, and I look forward to continued partnerships as we work to develop Massachusetts’ economy, and ensure that communities across the commonwealth share in our economic growth.”

The council is expected to address many of the same business-development challenges that AIM included in its centennial Blueprint for the Next Century plan. Issues such as regulatory reform, workforce development, business costs and innovation are expected to dominate the agenda.

Kenary will be joined on the council by three fellow AIM directors - Andrew P. Botti, Esq., Director, McLane Middleton Law Firm; Jeevan Ramapriya, Vice President, State Street Bank and Trust Co.; and Ralph Smith, Chief Executive Officer, President and Director, Kayem Foods Inc.

Other members named to the council include:

  • Arthur Barrett, President, Barrett Distribution Centers
  • Delcie D. Bean IV, CEO, Paragus Strategic IT
  • Tom Chmura, Vice President for Economic Development, University of Massachusetts
  • Donna Cupelo, Regional President, Verizon New England
  • Jack Healy, President and CEO, Massachusetts Manufacturing Extension Partnership
  • Salvatore Lupoli, President and CEO, Lupoli Companies
  • Chris Oddleifson, President and CEO, Rockland Trust
  • Peter Stasiowski, Director of Communications and Human Resources, Interprint Inc.
  • Susan Mailman, President, Coghlin Electrical Contractors, Inc.
  • Robert F. Rivers, President and COO, Eastern Bank
  • Karen Kaplan, Chairman/CEO, Hill Holiday
  • Wayne Canty, CEO/ Owner, Heat Trace Products, LLC

Public-sector participants include the co-chairs of the Legislature’s Joint Committee on Economic Development and Emerging Technology, Senator Eileen Donoghue and Representative Joseph Wagner. Administration and Finance Secretary Kristen Lepore, Labor and Workforce Development Secretary Ron Walker, Energy and Environmental Affairs Secretary Matthew Beaton, and Transportation Secretary Stephanie Pollack are also part of the panel.

“AIM is an association of employers so we are delighted that Dan Kenary and other talented employers are part of the Economic Development Planning Council. No one can help the Baker administration better understand the challenges of job creation than the people actually creating jobs here in Massachusetts,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Massachusetts law requires the appointment of an economic development planning council, and the filing of an economic development plan, within the first year of each new gubernatorial administration. The Council will convene again for the second and final time on December 9 to offer its final recommendations

Topics: Associated Industries of Massachusetts, Charlie Baker

Remember the Ratepayer

Posted by John Regan on Sep 28, 2015 10:20:45 AM

A manufacturing company in Berkshire County pays an average of 12.87 cents per kilowatt hour for electricity.

ElectriclinessmallMove that company several miles to the west, over the New York border, and the cost drops by more than half, to 6.15 cents per kilowatt hour.

Remember those numbers when someone tells you that electricity costs don’t affect where companies locate and create jobs. The difference can add up to millions of dollars per year and hundreds of jobs.

The corrosive impact of high electricity costs on the state economy will be front and center tomorrow as Associated Industries of Massachusetts testifies on multiple bills pertaining to solar power and hydro power. The hearing underscores the responsibility of policymakers to refocus Massachusetts energy policy around the one figure largely forgotten in the often esoteric political debates over power – the ratepayer.

It’s the same ratepayer who foots among the highest electricity bills in the country. The same customer whose rates have surged 56 percent during the past decade versus 38 percent for the nation as a whole. The same employer and citizen who have suffered massive increases for several years in winter electric rates because the commonwealth lacks adequate infrastructure for natural gas and hydro power.

“High energy costs have real consequences for some of the most important industries in Massachusetts, from advanced manufacturing to hospitals to colleges and universities,” says Robert Rio, Senior Vice President of Government Affairs for AIM, who will testify before the Legislature’s Joint Committee on Telecommunications, Utilities and Energy.

“Energy policy must fundamentally be about cost and competitiveness. Massachusetts must use competitive market forces to determine the most efficient and cost-effective methods for generating and transporting power to the Bay State.

AIM will oppose five bills that would force Massachusetts employers and consumers to purchase significant amounts of electricity generated under long-term contracts with hydro, wind and solar generators. Employers generally support diversification of energy sources and use of renewable energy, but none of the six bills alone will increase the reliability of the electric system at the lowest possible cost to consumers.

All of the bills in one way or another establish long-term contracts for large hydropower or other renewables. The bills together would authorize nearly 2,700 megawatts of power - more than four times the electricity generated by the Pilgrim nuclear power plant – to come from renewables and hydro power under long-term deals without adequate protection for ratepayers.

The impact of long-term contracts on electricity prices could be severe and lead to unintended detrimental changes in the way customers use electricity

Given the large amount of power, even small price discrepancies would have large economic consequences. For instance if just 1,700 megawatts are contracted and the difference is 6 cents per kWh average the additional burden is nearly $1 billion per year to ratepayers.  

AIM will also oppose a Baker Administration proposal to expand the commonwealth’s dysfunctional solar-energy subsidy program. The measure would add $600 million to ratepayer bills by 2020 on top of the $4 billion that business and residential customers are already paying to subsidize solar installations.

The solar program, referred to as net metering, creates a system in which virtually all the savings (except for wholesale fuel costs) attributable to solar installations are a transfer from non-participating ratepayers to those who have solar, increasing costs for those who may not be able to take advantage of solar programs. If everyone took advantage of solar programs, there would be no ratepayers left to pay the cross-subsidy.

Additionally, as solar programs increase, there are fewer customers to pay the cost associated with maintaining the distribution and transmission system, which is still required to be ready willing and able to serve the customer when the sun is not shining. Solar customers also fail to pay their fair share of social costs embedded in distribution rates, causing a massive shift in who pays for programs that serve low-income customers.

“Reducing the cost of solar programs and electricity should be the highest priority. Massachusetts ratepayers are not only spending an enormous amount of money for solar power, we are spending at rates double any other state,” Rio says.

AIM seeks a market-based approach once Massachusetts hits its objective of 1,600 megawatts of solar generation.

Topics: Energy, Business Costs, Charlie Baker

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