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Massachusetts Energy Laws Threaten Economic Future

Posted by John Regan on Jun 8, 2011 1:21:00 PM

Massachusetts must reform a tangle of often-conflicting energy laws that have failed to live up to their promise while driving up electric bills for both employers and homeowners, AIM told a legislative committee today.

Electricity CostsAIM Senior Vice President Robert Rio told the Joint Committee on Telecommunications, Utilities and Energy, that the 2008 Green Communities Act and other laws that were supposed to reduce the oppressive cost of power in Massachusetts will instead raise the distribution portion of electric bills 50 percent by 2020. Rio urged the committee to approve two AIM-sponsored bills that would place controls on non-competitive power deals like the one between Cape Wind and National Grid that is set to add thousands of dollars to employer costs.

“Clearly, we are risking an unprecedented increase in embedded utility costs from programs that are in some cases conflicting, overlapping or simply not cost-effective,” Rio testified.

He told lawmakers that the high cost of energy in Massachusetts – 38 percent above the national average - threatens the ability of the commonwealth to sustain economic recovery.

“The negative impact that these high rates are having on our economy is accelerating as the economy falters and even healthy companies look outside of Massachusetts to trim operating expenses. The huge difference between our rates and the others, and the reasons for it need to be understood and addressed by this committee if Massachusetts is going to recover from this economic recession.

“Other industries with high electric costs – hospitals, universities and municipalities also are suffering. While they can’t move out of state for cheaper rates, the costs incurred by these facilities are passed down in the form of higher health care costs, higher tuitions and higher taxes, further eroding our competitiveness.”

Rio said it is a “myth” that Massachusetts companies have benefited from the Green Communities Act in the form of lower electricity costs. In fact, he said, the energy cost picture in Massachusetts relative to other states has not changed much at all, due to the fact that declines in energy costs have been eaten up by increases in transmission and distribution costs.

The two bills filed by AIM - SB 1679 and HB 861, both entitled An Act Relative to Competitively Priced Electricity in the Commonwealth – would modify the Green Communities Act  by making its language and intent  explicit and precise about costs, revenues and programs.

Here’s what the AIM bill would do:

  • Require competitive solicitations for long-term power contracts like the one signed by Cape Wind and National Grid. The original legislation allowed negotiations that are outside the public view and not transparent. Cape Wind was not competitively bid and is costing National Grid ratepayers 25 cents per kWh versus approximately 7 cents for similar power.

  • Allow out-of-state renewable generators to compete with in-state generators for long-term contracts with utilities. When NSTAR was able to seek competitive bids from both in-state and out-of state generators, it saw prices 40 percent lower than when it was limited to in-state vendors.

  • Allow ratepayers served by municipal light companies to access state funds for energy efficiency that are paid by their customers through the Regional Greenhouse Gas Initiative.

  • Require utilities to distribute accurate and timely itemized information to businesses to show the impact of rate increase.

  • Require utilities to itemize the cost of various programs for which customers are paying under the Green Communities Act.

  • Create a mandatory phase-in period (24 months or more) for any rate increase of more than 10 percent.

Use our Calculator | How Much Does Government Add to Your Electric Bill?

 

Topics: Massachusetts Legislature, Associated Industries of Massachusetts, Energy, Cape Wind

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