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Bob Rio

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How Much Do Energy Giveaways Add to Your Electric Bill?

Posted by Bob Rio on Jan 11, 2016 7:30:00 AM

“It will only cost a cup of coffee a month.”

We hear that phrase a lot from renewable-energy advocates seeking to justify uneconomical and inefficient government subsidy programs by arguing that they waste only a small amount of money at a time.

solarpanels.small.jpgBut put enough cups of coffee together and these programs turn into a something like a Box O’ Joe that poses a real threat to the Massachusetts economy.

The incremental costs of half-baked energy subsides add up, particularly for large customers like manufacturers and hospitals that cannot avoid them unless they reduce their electricity use to zero through onsite generation, which is not always practical. These politically generated costs are not added to the bottom lines of competitors in other states.

The subsidies avoid ratepayer outrage in large part because their cost is virtually invisible to the consumer, hidden in dark corners of electric bills. Some are tucked under the “energy” portion, some are under “distribution,” some are listed separately. Some, like solar and energy efficiency are listed under both. And don’t forget other costs that are sure to increase over the next few years, including transmission.

How much do these programs cost residential and commercial ratepayers? The state solar subsidy program checks in at $600 million per year and is headed for $1.5 billion per year. The energy efficiency program tacks on another $600 million per year. The regional greenhouse gas program, which charges electrical generators for their carbon emissions, totals another $60 million.

AIM is today unveiling an energy calculator designed to help Massachusetts employers decipher the maze of government-mandated energy subsidies. The calculator was developed with Energy Tariff Experts, LLC, and works for most customer classes (including residential), in National Grid and Eversource territories. Other rate classes will be added as necessary.

Based on trials with some members, the results show:

  • Total subsidies for state-mandated programs, most of which have been added since 2008, can equal 25 percent of a customer’s total bill.
  • Solar subsidies are so large they will likely become the largest mandated program on a customer’s bills this year. In fact, the cost nearly equals the cost for energy efficiency.

We invite you to use the AIM energy calculator. Also, if you are inclined, please save the spreadsheet and send us a copy. No identifying information is collected on our Web site or on the spreadsheet.   

Download the AIM Energy Calculator

Topics: Energy, Business Costs, Solar Subsidies

Legislature Wisely Takes Time on Solar Subsidies

Posted by Bob Rio on Nov 19, 2015 9:18:13 AM

Beacon Hill lawmakers ended formal sessions for 2015 without an agreement on solar-energy subsidies after AIM and other business organizations warned that expanding such payments would pump billions of dollars into the pockets of solar energy developers.

solarpanels.smallA House-Senate conference committee was appointed yesterday to resolve differences between two distinct approaches - a House bill passed Tuesday that would lift the cap on the amount of public and privately generated solar power that could be sold back to the grid at retail rates by 2 percent; and a Senate version more generous to the solar industry.

Conferees quickly acknowledged, however, that additional discussions will be needed when the Legislature begins the final year of its session in January.

John Regan, Executive Vice President of Government Affairs for AIM, commended lawmakers for taking the time to find a balanced solution to a complex problem.

“It’s important for Massachusetts to get this issue right, so we support the deliberate approach being taken by the Legislature. AIM supports the development of solar energy, but not in the form of a government-sanctioned giveaway that will harm the 99 percent of ratepayers who do not have solar,” Regan said.

AIM and six other business organizations sent a letter to the conference committee late yesterday opposing the Senate version of the solar boll passed earlier in the day. The groups outlined several objections to the Senate bill:

  • It unnecessarily increases the net metering reimbursement rate to an alarmingly high level – up to full retail value in some cases – instead of rates more in line with wholesale market rates. The House version thoughtfully gives the Department of Energy Resources the authority to establish different incentive levels for different types of installations through a transparent process, based on needs of solar developers, customers, and the electric grid – using incentives to stimulate the right types of projects in the right areas.
  • It extends grandfathering of current installations to 30 years (up from 20 in the House bill) and excludes residential installations from any future changes. Increasing grandfathering to 30 years will unnecessarily add more cost to the program – paid for by all other ratepayers.
  • It deletes the House plan to have the Department of Public Utilities determine a minimum bill for solar users. The minimum bill is not designed to be punitive. It is a charge that each customer needs to pay to maintain the reliability of the electric grid they are currently using as well as paying their fair share of social costs, including low- income subsides, environmental cleanup and energy efficiency that were deemed worthy by the legislature.
  • It will continue the highest subsidies in the region, at a time when other states are lowering subsidies – and finding that lower subsides enhance their programs, not hurt them.

Net metering allows solar panel owners to be reimbursed for the electricity they send back onto the grid. The Legislature caps the amount of net metering credits allowed in a particular utility’s system. 

Senator Benjamin Downing, chair of the Joint Committee on Telecommunications, Utilities and Energy, said the House bill went "too far on the cost side" to lower reimbursement rates after the state hits its target of 1,600 megawatts of installed solar capacity, while House Ways and Means Chair Brian Dempsey said controlling cost for ratepayers who do not use solar is a prime concern to the House.

Downing and Dempsey are both part of the conference committee, along with Representatives Thomas Golden and Brad Jones, and Senators Bruce Tarr and Marc Pacheco.

The last-minute flurry of solar activity came on the same day that Attorney General Maura Healey issued a report on natural-gas pipeline capacity that looked at system reliability and greenhouse gas emission rather than costs.

 “Associated Industries of Massachusetts and its 4,500 members remain concerned above all with the unbearably high cost of electricity in the commonwealth. The attorney general’s study deals primarily with electric reliability rather than with persistently high electric rates and also does not address the lack of natural gas availability in certain parts of the state for heat and process needs. Both of these issues erode the ability of employers to expand and create jobs,” the association said in a statement.

 

 

 

Topics: Energy

What Will Solar Subsidies Cost Your Business?

Posted by Bob Rio on Nov 8, 2015 4:30:00 PM

The special interests and solar developers seeking expanded subsidies for solar power in Massachusetts don't talk about how much these handouts cost business and residential ratepayers. Here's a quick look at what it means to your bottom line.

Solarcosts

Topics: Environment, Energy, Business Costs

New England's $5.4 Billion Energy 'Tax'

Posted by Bob Rio on Aug 27, 2015 3:29:00 PM

How serious is the energy cost crisis in New England?

ElectriclinessmallA new study from business and labor organizations warns that failure to expand electricity and natural-gas infrastructure in the six-state region will generate the equivalent of a $5.4 billion tax on employers and homeowners between 2016 and 2020. Such an increase would negate 80 percent of the region’s projected private-sector job growth and drain $16.1 billion from economic output.

The study comes from the New England Coalition for Affordable Energy, which includes AIM. Other organizations include Associated Industries of Vermont, Business & Industry Association of New Hampshire; Brotherhood of Utility Workers Council, UWUA 369; Connecticut Business & Industry Association; Independent Oil Marketers Association of New England; NAIOP Massachusetts; National Federation of Independent Business (CT, MA, ME, RI, VT Chapters); Maine State Chamber of Commerce; and the Retailers Association of Massachusetts.

The economic devastation outlined in the study would be on top of the reported $7.5 billion in energy costs the region has already incurred over the past three winters due to the natural gas pipeline system reaching maximum capacity during winter months to meet both electricity generation and space heating demands.

“Energy issues are almost universally mentioned by members as the number one impediment for expanding in Massachusetts,” said John Regan, Executive Vice President of Government Affairs at AIM.

“This study clearly shows that without action, Massachusetts’ energy costs will go even higher, permanently hurting our competitiveness and resulting in major direct and indirect job losses as consumers are forced to pay higher prices for energy rather than investing that capital here.”

In May of this year, Massachusetts commercial and industrial electric rates paid some of the highest prices in the country for electricity, nearly double North Carolina and even higher than California. While rates in other parts of the country are flat or declining due to available and cheap natural gas, Massachusetts’ rates are increasing.

The study, conducted by Boston consulting firms La Capra Associates and Economic Development Research Group, found that failure to expand the region’s energy infrastructure will lead to a reduction in disposable income that could top $12 billion, and 167,600 jobs lost or not created. These impacts would ramp up from 2016 through 2020, with similar or larger impacts expected beyond that timeframe if infrastructure is not added.

AIM has consistently advocated for more natural gas infrastructure to take advantage of close and abundant natural gas supplies, while at the same time continuing to explore the use of large hydropower and renewables to help with diversification.  The association does not take a position on any individual infrastructure projects or financing mechanisms.

Five New England governors, including Massachusetts Governor Charlie Baker, pledged in April to work together to help consumers who pay more for electricity than almost anywhere else in the United States. While the costs and political challenges of investments in natural gas pipelines, transmission wires and renewable energy remain formidable, the governors nevertheless acknowledged that solving the energy crisis “is greater than any one state can solve alone.”

“We recognize that each state may support addressing our regional energy challenge in different ways. These efforts must be done in partnership with state legislatures, and respecting the requirements of laws, regulatory proceedings, and opportunities for public participation that are unique to each individual state,” the governors said in a statement.

Topics: Environment, Energy, Business Costs

Infographic | How Competitive Are Energy Prices in Massachusetts?

Posted by Bob Rio on Apr 10, 2015 11:41:12 AM

Massachusetts employers often cite energy costs as an impediment to growth. Here's why.

Energy.04.10.15

NU, National Grid Terminate Cape Wind Contracts

Posted by Bob Rio on Jan 6, 2015 9:12:00 PM

“Very bad news for Cape Wind. Very good news for Massachusetts ratepayers.”

WindTurbinesOceanSmallThat’s how one opponent of the proposed Nantucket Sound wind farm characterized the decisions by Northeast Utilities and National Grid yesterday to terminate their long-term contracts with the offshore wind farm. The two companies cited the fact that Cape Wind missed a December 31 deadline to obtain financing and begin construction, and chose not to put up financial collateral to extend the deadline.

This is one case of buyer’s remorse that will benefit virtually every Massachusetts employer and homeowner who buys electricity – the contracts would have placed ratepayers on the hook to buy Cape Wind power at an average of 25 cents per kilowatt hour over 15 years, more than twice the rate of power generated by on-shore wind facilities.

AIM and its 4,500 member employers, who have long opposed the contracts, strongly endorse the decisions by the two power companies to terminate their Cape Wind deals.

“Northeast Utilities and National Grid deserve tremendous credit for taking actions that will save customers billions of dollars that would otherwise have been spent buying electricity at the highest power price ever negotiated in Massachusetts,” said John Regan, Executive Vice President/Government Affairs at AIM.

“AIM has consistently supported economically beneficial renewable power projects that provide energy to commercial, industrial and residential customers at reasonable rates. The association opposed the Northeast Utilities and National Grid deals with Cape Wind - and challenged one in court – because the staggering costs of the project would have saddled ratepayers for decades to come.

“AIM thanks both Northeast Utilities and National Grid for their leadership in protecting the interest of ratepayers while committing to vibrant clean energy programs.  “ 

 

Northeast Utilities and NSTAR agreed to buy 27.5 percent of Cape Wind’s production amid withering pressure from the Patrick Administration during regulatory review of the two companies’ proposed merger. National Grid had previously signed on to purchase 50 percent.

AIM believes Cape Wind is symptomatic of state energy policies that have failed to live up to their promise while driving up electric bills for both employers and homeowners. The association believes that energy initiatives must benefit customers, who already pay some of the highest electricity rates in the country:

  • Long term contracts must be competitive bid. There should be no option for individual negotiations outside the bidding process.
  • 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.

Topics: Environment, Energy, Cape Wind

Bureaucratic Self-Preservation at TURA

Posted by Bob Rio on Sep 29, 2014 9:55:00 AM

The Massachusetts Toxics Use Reduction Act (TURA) has in many ways lived up to its name – fees established under the law have prompted scores of companies to reduce or eliminate their use of chemicals, cutting overall payments into the program. Unfortunately, the people who run TURA have taken that as a cue to jack up fees to a level that may drive many of the remaining companies out of state.

InnovationSmallThe TUR Administrative Council voted 4-2 a week ago to begin the regulatory process to raise TURA fees nearly 50 percent for many companies, with total overall fees collected increasing 42 percent, (some of the smaller companies get less of an increase).

The two members to vote against the proposal were Timothee Rodrique, Chief Engineer, Division of Fire Safety and Tim Wilkerson, Regulatory Ombudsman, Director of Economic Policy Development. The proposal will now proceed through the normal process for regulation changes, including public comment.

Enacted in 1989 and amended most recently in 2006, TURA requires Massachusetts companies that use large quantities of listed chemicals to evaluate and plan for pollution prevention opportunities, implement them if practical, and annually measure and report the results.

AIM opposes the proposal to increase fees:

  • The universe of filers under the TURA program is only 468 companies. Forcing those companies to pay more to fund programs from which they derive no benefit is anti-business and acts more as a tax than a fee.  
  • Mmany companies left on the list either manufacture or distribute listed chemicals, or use these chemicals in a way for which there is no substitute. These companies thus pay a tax for merely operating – and employing workers – here in Massachusetts. No other state levies such a fee.    

  • The fee is even applicable if a company uses these chemicals for public safety or pollution control.

AIM was also concerned with the lack of analysis related to the impact these fees would have on users and the lack of notification to the impacted parties.  

AIM has at times supported regulatory fee increases, but only when those hikes are connected to a benefit the payers are receiving. Here, the program is continuing to collect fees only because many of the remaining companies are caught in an endless cycle of reporting. The overall fee income is declining because a shrinking number of companies use these chemicals, which under normal conditions would be considered a success. Here it just means more fee increases for the remaining companies to maintain the program

As the regulatory process continues we urge those who will be impact to make comments and call their elected officials to make the point that the fee increases should be reasonable and connected to a service provided.  

Topics: Regulation, Environment

Scrap the Back-Room Solar Subsidy

Posted by Bob Rio on Jun 23, 2014 6:30:00 AM

How did your neighbor afford to install the array of solar panels now sitting on his roof?

solarpanels.smallSimple - you paid for some of it.

And you may soon pay more for it because of a back-room deal hatched by solar panel providers and other special interests on Beacon Hill.

The House Ways and Means Committee is debating a proposed revamp of the state’s expensive solar subsidy program that would add an estimated $1.5 billion to the electric bills of employers and consumers during the next 15 years.

The bill was developed behind closed doors by state officials and organizations with a vested interest in keeping the program as lucrative as possible, including solar and clean-energy lobbyists and at least one solar installation company. Associated Industries of Massachusetts (AIM) and other advocates for electric ratepayers were excluded.

AIM enthusiastically supports the use of solar power in the Bay State, but opposes the current proposal to lift the existing cap on the subsidy, or net metering, program in specific utility territories. The rate shock caused by the measure will place a damper on the economy by increasing costs for the commercial and industrial ratepayers who currently foot 40 percent of all electricity costs in Massachusetts.

The association, in a letter sent last week to the Ways and Means Committee, urges the panel to direct the Massachusetts Department of Energy Resources (DOER) to initiate a new and transparent discussion of solar net metering with realistic timelines, realistic goals and a multitude of options, including a cap on the yearly cost of the program. The objective should be to advance renewable power while simultaneously reducing overly generous subsidies to this industry.

Net metering allows customers to receive credits to their electric bill for generating solar power.

“Net metering benefits only those who are able to install solar panels on their roofs or have some access to community solar programs. It largely excludes low-income people, renters and small businesses that do not have the appropriate land area for solar,” said John Regan, Executive Vice President of Government Affairs at AIM.

“The result is that the ‘have-nots’ will subsidize those who have the means to install these panels, a wealth transfer amounting to billions of dollars. As the program gets larger, the subsidies get larger, creating a never-ending escalation of costs to those left on the system still paying the bill

The bill would also replace a second subsidy program that establishes a market for solar energy certificates sold to utilities so they meet their renewable energy mandates, with an electricity tariff program designed to get as much as 1,600 megawatts of solar developments built in the state.

AIM’s objections to the current bill include:

  1. The troubling, non-collaborative approach that deliberately excluded interested parties from the development of the new draft.
  2. Lack of disclosure concerning the cost of the program to ratepayers.
  3. Language that eliminates oversight by the Legislature.
  4. Unclear need for the legislation.

The secretive negotiations that produced the current bill have made it nearly impossible for AIM and other organizations representing the interests of ratepayers to estimate the final cost of the expanded subsidy program. Negotiators refused to discuss the cost of the program at an informational meeting on June 11 in Boston and dismissed a question from the audience on this topic as irrelevant.

And financial data is not the only evidence missing from the proposal. The solar subsidy has often been touted as necessary to reach greenhouse gas-reduction goals, but there was no indication at the informational meeting or in the supporting documents as to the amount of greenhouse gases that would be reduced by this program or the cost per ton of greenhouse gases reduced.

“A rush to pass this legislation will touch off a firestorm of criticism from a business community forced to pick up the tab for a poorly conceived and economically destructive program.   The Legislature is being handed in the hectic final days of the session a costly measure that will set energy policy for decades to come with no protections for ratepayers,” AIM said in its letter to the committee.

 

Topics: Massachusetts House of Representatives, Energy, Subsidy

Carbon Pricing Today, Carbon Tax Tomorrow

Posted by Bob Rio on Jun 18, 2014 2:13:05 PM

Warren Buffet is fond of saying that price is what you pay, value is what you get.

InnovationSmallA new state effort to set a premium price on the carbon dioxide saved through energy efficiency is likely to provide little value - beyond setting the stage of a carbon tax that will ultimately raise the cost of electricity for employers and consumers.

The Massachusetts Department of Environmental Protection (DEP) and Executive Office of Energy Environmental Affairs (EOEEA)have filed a joint petition asking state energy regulators to set the price of carbon dioxide saved through energy efficiency at $54 per metric ton. That price would be more than 10 times higher than the value currently assigned by the Regional Greenhouse Gas Initiative, the Northeast Plan to reduce carbon dioxide emissions from utilities.

State officials claim they need to set a price for carbon dioxide to calculate the benefits of energy efficiency programs. But there is little doubt that the process also establishes the foundation for a tax on the carbon contents of gasoline, natural gas, heating oil, coal and other fossil fuels.

Associated Industries of Massachusetts opposes a carbon tax of this magnitude because it would raise what are already some of the highest costs in the nation for electricity and heating fuels. A group of environmental activists initially hoped to place a carbon tax question on the 2014 election ballot, but later withdrew the initiative citing the complexity of the issue, weak fund-raising, and potential constitutional challenges to the question.

“Massachusetts is already committed to reducing carbon through the Regional Greenhouse Gas Initiative, which already acts as a carbon tax” said John Regan, Executive Vice President of Government Affairs at AIM.

“Raising the cost of living or the cost of doing business just to make a statement seems counterproductive.”

A carbon tax is an environmental fee levied by governments on the production, distribution or use of fossil fuels. The amount of the tax depends on how much carbon dioxide each type of fuel emits when it is used to run factories or power plants, provide heat and electricity to homes and businesses, and drive vehicles.

AIM intends to intervene on behalf of employers in any discussion of a carbon tax in Massachusetts. The largest employer association in Massachusetts remains determined to ensure that any such tax is based on transparent methodologies and does not place Massachusetts at a competitive disadvantage for electricity costs.

Even without the specter of the carbon tax, the attempt to set a Tiffany price on carbon represents a transparent attempt by the commonwealth to overstate the solid value of energy efficiency. The idea is that replacing a light bulb in your home, which generates a financial return from electricity saved, would now return far more benefit if the carbon price of $54 per metric ton were added. That’s a formula for keeping price and value out of whack.

Member employers interested in learning more about AIM's effort in this docket should contact me at rrio@aimnet.org.

Topics: Environment, Energy

Cape Wind Underscores Electricity Cost Issues Facing Employers

Posted by Bob Rio on Feb 22, 2010 1:53:00 PM

The controversial Cape Wind offshore generation project underscores a delicate balance faced by Massachusetts employers: How do you support environmentally friendly power generation when it carries a price premium and you already pay the highest electric rates in the country?

AIM has been quoted extensively in the national media during the past month on the feasibility of Cape Wind and other renewable energy projects. We believe it is important to state our position clearly.

The utility National Grid is currently negotiating with Cape Wind for a long-term power contract that could run as long as 15 years. With contracted prices expected to be in the 15-17 cent per kWh range, Cape Wind power will be almost double the going rate for power generated by highly efficient and clean natural gas fired power plants.

Massachusetts prohibited utilities from entering into long-term power contracts from 1997 through last year, when legislation again allowed such agreements for renewable power. The potential length of the National Grid/Cape Wind contract and the sheer size of Cape Wind add up to extensive price exposure for residential and business ratepayers.

AIM opposes long-term contracts for any type of power. The agreements lock utilities into prices that may not be to the long-term benefit of the ratepayer, who carries all the risk - if power prices later fall, the utility is obligated to pay the higher prices until the contract ends. The risk is particularly problematic for large and expensive renewable projects like Cape Wind.

The cost of power is nothing short of a survival issue for Massachusetts employers, who in some cases pay twice what competitors in other states pay to turn on the lights. AIM has worked for years to moderate the cost of electricity because skyrocketing rates reduce the competitiveness of Massachusetts employers and impede their ability to create jobs for the people of the commonwealth.

AIM believes that the most efficient (and hence the cheapest) renewable power should be purchased first to minimize costs to ratepayer. We should not be paying a premium for symbolic gestures. Buying the cheapest available renewable power - onshore or offshore; wind, solar or biomass - will produce the greatest environmental benefits at the cheapest cost to ratepayers.

Topics: Associated Industries of Massachusetts, AIM, Environment, Energy

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