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Offshore Wind Project Underscores Value of Competition

Posted by Bob Rio on May 23, 2018 5:40:55 PM

Associated Industries of Massachusetts today applauded the competitive process that led to the selection of Vineyard Wind to begin developing a wind farm off Martha’s Vineyard that will power the equivalent of 750,000 homes each year.

WindTurbinesOceanSmallThe selection of Vineyard Wind, a joint venture between of Avangrid Renewables and Copenhagen Infrastructure Partners, follows an intensive bidding process conducted under the 2016 Act to Promote Energy Diversity. AIM supported the competitive elements of that bill as a means to get the best deal possible for ratepayers as the commonwealth moves to renewable sources of electricity.

Vineyard Wind, an AIM member, will now begin negotiations to secure the necessary transmission services and power purchase agreements to facilitate the delivery of offshore wind electricity to Massachusetts customers. Once satisfactory contract terms are secured, those documents will be submitted to the Massachusetts Department of Public Utilities for formal review.

AIM expects to represent the interests of employers in that review.

No figures were released yesterday about what the power produced by the Vineyard Wind development will cost. 

“AIM supports competition as the best way to moderate energy costs in Massachusetts and that idea was clearly born out by the spirited race to build the nation’s first large-scale wind farm,” said Richard C. Lord, President and Chief Executive Officer.

The 2016 energy bill required the state’s electric distribution companies to procure 1,600 megawatts offshore wind energy within the next decade, resulting in intense competition among offshore wind lease holders for long-term contracts with utilities in Massachusetts.

Vineyard Wind says its project will “support hundreds of operations and maintenance jobs and create thousands of construction jobs.”

“Vineyard Wind is proud to be selected to lead the new Massachusetts offshore wind industry into the future,” said Lars Thaaning Pedersen, CEO of Vineyard Wind. “Today’s announcement reflects the strong commitment to clean energy by Governor Baker and the Massachusetts Legislature.”

Vineyard Wind expects to begin construction in 2019 and become operational by 2021. When completed, the will reduce Massachusetts’ carbon emissions by over 1.6 million tons per year, the equivalent of removing 325,000 cars from state roads.

The proposal also commits $10 million to a Wind Accelerator Fund to accelerate the development of an offshore wind supply chain, businesses, and infrastructure in the Bay State by attracting investments to upgrade or create necessary facilities and/or infrastructure.

It also creates a $2 million Windward Workforce program to recruit, mentor, and train residents of Massachusetts, particularly southeast Massachusetts, Cape Cod and the Islands, for careers in the commonwealth’s new offshore wind industry.

Separately, a second AIM member, Deepwater Wind, was selected yesterday to develop 400 megawatts of offshore wind to serve Rhode Island.

Topics: Environment, Energy, Offshore Wind

Natural-Gas Constraints Bad for Business, Bad for Environment

Posted by Bob Rio on May 8, 2018 11:41:13 AM

A shortage of natural-gas capacity during the December/January cold snap added $1.7 billion to the electric bills of business and residential customers in New England while erasing all the environmental benefits from solar energy in Massachusetts during 2017.

coal_power_plantNow you know why Massachusetts employers support the idea of expanding natural-gas infrastructure in the region.

New data released yesterday by the Massachusetts Coalition for Sustainable Energy (MCSE) and compiled by Concentric Energy Advisors underscores the economic and environmental damage wrought by our energy status quo. AIM is a member of the Coalition, along with scores of other business associations and labor unions.

Natural gas supplies in the region are tight during the winter. Despite abundant supplies just a few states away, pipeline infrastructure to get it here is inadequate and efforts to address this issue have been stymied by those who believe upgrading our natural gas infrastructure will stall progress on transitioning to clean energy. 

Electricity generators simply don’t have enough natural gas to operate during the bitter cold because most of the available gas is used to serve businesses and homeowners.

To satisfy the increased demand for electricity, power plants burn stored back-up oil and coal. The lights stay on, but greenhouse gas emissions increase exponentially since oil and coal emit more carbon than natural gas. The cold-weather shortage of natural gas has become so common in recent winters that power generators are paid to store oil, whether or not it is needed, as sort of an insurance policy funded by ratepayers through higher electric rates.

According to the Concentric report, the amount of coal and oil burned during just a two-week period generated 1.3 million tons of extra greenhouse gas emissions over what would have been emitted if gas had been available. The ratepayer cost was $1.7 billion higher than the previous winter – most of which will show up in next winter’s energy bills. 

In fact, Eversource yesterday sought a 15 percent increase in electric rates for customers in western Massachusetts for the period July through December.

How much is 1.3 million tons? The extra greenhouse gases negated all the greenhouse gas saving from all the solar energy produced in Massachusetts throughout 2017. It’s a problem that cannot be solved by adding more solar capacity since the highest need for natural gas is in the winter, when solar output is at its lowest.

Had the cold period continued (or if another came later in the year), brownouts would likely had occurred. ISO-NE, the regional power grid operator, reports that the system was about three days away from crashing as some plants were already running out of oil and had to curtail their output.       

This dangerous mix of rising costs, rising emissions and brownouts comes at a time when other states are dangling low energy costs in front of Massachusetts employers to persuade those companies to expand elsewhere. It’s not a tough sell – our energy costs are nearly double those of states in other regions of the country.

AIM, along with other members of the Coalition for Sustainable Energy, support a balanced approach to address the region’s energy problems. That approach embraces renewables - AIM has supported the development of both hydro power and offshore wind – while at the same time acknowledging the stresses on our current system and the economic and environmental damage that is occurring.

Read the Concentric Report

Please contact me at rrio@aimnet.org for more information.

 

Topics: Massachusetts economy, Environment, Energy

Natural Gas Central to Energy Cost Moderation, Greenhouse Reductions

Posted by Bob Rio on Apr 25, 2018 11:00:00 AM

How do you reduce greenhouse-gas emissions by 80 percent and accelerate the development of renewable energy without bankrupting businesses that already pay among the highest electric rates in the nation? One key element as New England relies more heavily on electric power is expanding natural-gas capacity. That's why Associated Industries of Massachusetts is part of the MASS Coalition for Sustainable Energy.

The video below is a must-watch for any employer worried about his or her electric bills.

Employers interested in more information about the cost of energy may contact Bob Rio at rrio@aimnet.org

Topics: Environment, Energy, Sustainability

Updated Generator Rules Lower Costs, Improve Safety

Posted by Bob Rio on Mar 19, 2018 8:30:00 AM

The Baker Administration’s three-year-old regulatory review initiative resolved a major issue for Massachusetts employers on March 9 when the Department of Environmental Protection (DEP) broadened the ability of companies to use emergency electric generators.

Generator.jpgDEP’s amended Air Pollution Control regulations ironed out inconsistencies between federal rules, which allow limited non-emergency use of generators, and state rules, which did not.

Associated Industries of Massachusetts long argued that the prohibition on non-emergency use was forcing member companies to rent generators during shutdowns for non-emergency tasks such as electric panel upgrades. The practice was not only costly but dangerous as equipment had to be brought in when the same equipment was on site.

DEP on March 9 changed the rules on emergency generators to mimic federal regulations, increasing safety, reducing emissions and saving money

  • The previous 300-hour limit for emergencies has been removed; and
  • Up to 50 hours per year may be use for non-emergency use (as part of a larger 100 hour per year exemption).

The regulation update is the latest bit of good news to come out of Governor Baker’s 2015 Executive Order 562, which required state agencies to review their regulations to eliminate or modify outdated or burdensome requirements while aligning Massachusetts regulations with Environmental Protection Agency rules and other federal requirements.

“We believe that it was the governor’s Executive Order 562, requiring that state and federal regulations be consistent when possible, that prompted the recent amendments. Several AIM members have already contacted us to let us know that it will reduce their operating costs while at the same time result in enhanced safety and lower emissions,” AIM President and Chief Executive Officer Richard C. Lord wrote in a letter Friday to Governor Baker’s Chief of Staff, Kristen Lepore, and Secretary of Environmental Affairs Matthew Beaton.

There were several other changes in the March 9 rule-making. Companies should review the regulations for any changes applicable to their own operations.

Questions about the new regulations? Contact Bob Rio at rrio@aimnet.org.

 

Topics: Environment, Energy, Regulatory Reform

Lack of Natural-Gas Infrastructure Puts Massachusetts at Risk

Posted by Christopher Geehern on Mar 5, 2018 11:07:11 AM

Employers in Massachusetts pay some of the highest electricity rates in the country, in part because the commonwealth lacks adequate infrastructure to bring natural gas from other regions of the country. AIM Senior Vice President of Government Affairs Robert Rio last week debated the natural-gas issue on Commonwealth magazine's Codcast with Elizabeth Turnbull Henry, President of the Environmental League of Massachusetts.

Commonwealth.Codcast.jpg

Topics: Environment, Energy, Business Costs

Senate Energy Bill: Christmas for Special Interests

Posted by Bob Rio on Feb 13, 2018 8:58:57 AM

Some members of the Senate don’t want you to spend all those recently announced savings on your electric and gas bills just yet.

solarpanels.small.jpgWeeks after federal tax reform generated rate reductions of $56 million for Eversource electric customers and $36 million dollars for National Grid gas customers, the Senate Committee on Global Warming and Climate Change released an energy bill yesterday that will take all the savings back from the wallets of consumers.

Proponents claim these proposals will reduce the threat of climate change. They will not. Instead, the bill has become Christmas in February for energy related special interests. 

The 71-page bill, still under review by AIM, contains unnecessary and redundant programs just a year after the Legislature passed and Governor Charlie Baker signed another omnibus energy measure that brought competitive bidding to the procurement of clean energy. Massachusetts has already committed to a goal of 80 percent clean energy by 2050.  Legislating more will not make it happen faster – it will just increase prices for something we are already on track to meet.

The bill includes:

  • A requirement for the Secretary of Energy and Environmental Affairs to develop a new “market-based compliance mechanism” on carbon emissions from transportation. The mechanism is better known as a carbon tax.  AIM supports imposition of a tax on carbon only if the money is used exclusively to invest in programs, including public transportation, that reduce fuel use. The current bill passes such discussions off to a regulatory process.  
  • A mandated increase in the amount of renewable power purchased by energy suppliers. Last year’s energy bill required the state’s utilities to purchase large amounts of offshore wind, hydropower and onshore wind as part of the largest competitive procurements for power ever in Massachusetts.  The results of these competitive bids are currently under review by the Department of Energy Resources (DOER) and the Department of Public Utilities (DPU). AIM believes lawmakers should let the current process play out before layering addition regulations on top.
  • An increase in subsidies (net metering) for solar development. The provision sounds good, but is unnecessary. The commonwealth unveiled a new competitive solar program in August that has already  reduced the cost of solar energy by nearly 50 percent. Let the new program work.

Employers urge the new Senate President, Harriet Chandler, and House Speaker Robert Deleo to take no action on the energy bill since many of the proposals are already set in motion. Give the current programs time to be implemented in a manner that creates benefit for the ratepayer, not special energy interests.

Interested in updates on energy issues? Contact Bob Rio at rrio@aimnet.org. 

Topics: Massachusetts senate, Environment, Energy

Competition Moderates Clean-Energy Costs for Ratepayers

Posted by Bob Rio on Jan 16, 2018 8:30:00 AM

Clean energy in Massachusetts is finally subject to the laws of economics. That’s good news for both businesses and residents throughout the commonwealth who pay some of the highest electric rates in nation.

Hydro.jpgThe current competitive bidding process being conducted by Massachusetts utilities for large scale hydropower, onshore and offshore wind, and solar will not lower the price of electricity – at least not in the next few years. But ratepayers will at least be assured their money is being spent wisely.

Governor Charlie Baker signed two energy bills in 2016 that swept away the sweetheart deals and overly generous subsidies that characterized the clean-energy business prior to that time. The bills required purchases of clean energy to be competitive and transparent. The results are already evident, even before the contracts are signed.

In April 2017, as part of the first requirement for the utilities to purchase clean energy (primarily large hydropower from Canada and onshore wind) a request for proposals was sent to developers.

Suppliers responded with nearly 50 proposals, far more that the total cumulative amount allowed in the legislation. Some names you might recognize – Hydroquebec, for instance, has been sending power to Massachusetts for decades. But others may not be as familiar – Emera, Nalcor, TDI, Nextera, and Avangrid – some partnering with utilities National Grid and Eversource - all vying to serve Massachusetts consumers.

The clean energy process even attracted a bid from New England-based Deepwater Wind, which submitted a small offshore wind proposal, even though the larger competitive solicitation for offshore wind was not due until this month, separate from the initial clean energy bidding process.

While prices haven’t been disclosed yet (the analysis is based on a complex evaluation of bids and is confidential until a winning bidder is selected following by a public process at the Department of Public Utilities process), the fact that so many developers “sharpened their pencil” is a good start.

Bids under the clean-energy program are scheduled to be awarded around January 25. Bids for the separate offshore wind program will be selected on April 23..

Competition will have a particularly dramatic effect on solar energy.

Although some small solar projects were bid as part of the clean energy proposals, the vast amount of solar installations are currently subsidized through a different program that has been around for several years. It has become not only expensive – $500 million dollars per year, but also overly generous as the cost of solar installations has dropped more than 50 percent due to lower market prices.

Most states went to a competitive framework years ago – and saw significantly lower prices, but Massachusetts program is just starting. Bids for new solar projects were due in December. Those bids will establish a baseline process for solar power for the next several years. Based on the experience of other states, the prices should drop by more than half.

And that’s not all. In both the offshore wind and solar programs, future projects must be lower than the current prices, all but guaranteeing that the state has bent the price curve for these installations.

It’s an ambitious move. And in the aftermath of the Cape Wind debacle, some Massachusetts ratepayers may find it hard to believe that clean energy and offshore wind farms could be competitively priced and developed cost-effectively.

But that is what is happening. And the diversity of projects was no surprise to AIM – early supporters of bringing competition to clean energy.

The debate about whether the commonwealth will pursue clean energy is over. So is the debate about the value of competition to Massachusetts electric customers.

Topics: Electricity, Energy, Solar Subsidies

Tax Reform to Reduce Electric Rates

Posted by Bob Rio on Jan 3, 2018 6:22:15 PM

Federal tax reform may soon generate a $56 million windfall for Eversource electric ratepayers in Massachusetts.

Electriclinessmall.jpgEversource disclosed in a filing with the Department of Public Utilities today that the reduction in federal corporate tax rates from 35 percent to 21 percent will allow the company to reverse the rate increase approved for NSTAR customers in November and to reduce the amount of increase for customers of Western Massachusetts Electric Company.

NSTAR customers will now see a $35.4 million decrease in base rates instead of a $12.2 million increase. Western Massachusetts Electric customers will see their rate increase shrink from $24.8 million to $16.5 million.

Eversource indicated that it may seek additional rate reductions next January after calculating excess deferred taxes.

“Great news for Massachusetts employers struggling to manage the high cost of electricity,” said John Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts.

“Tax reform created a tremendous opportunity to provide rate relief to customers and Eversource deserves credit for moving rapidly to realize that opportunity."

Attorney General Maura Healey filed a motion with the DPU on December 20 seeking larger rate reductions. Eversource says its agrees with the need to reduce rates, but calculates the numbers differently. Utility regulators will now determine the final figures to be implemented on February 1.

AIM urges the DPU to approve the rate reductions for Eversource and to review the rates of other utilities in the wake of the changes in federal tax law.

Topics: Massachusetts employers, Energy, Massachusetts Department of Public Utilities

New Greenhouse Regulations Will Drive Up Costs for Employers

Posted by Bob Rio on Aug 11, 2017 11:29:19 AM

The Baker Administration will today introduce new regulations that set specific limits on sources of greenhouse gases, the emissions linked to climate change. State officials indicate that the regulations could increase costs to electric ratepayers by as much as 2 percent.

Electriclinessmall.jpgThe new rules aim to reduce the state’s carbon emissions 25 percent below 1990 levels by 2020, as required by state law.

Robert Rio, Senior Vice President of Government Affairs at AIM, issued the following statement:

“The 4,000 member employers of Associated Industries of Massachusetts are extremely disappointed with the Baker administration’s new electricity sector regulations. The administration openly admits that these rules will increase Massachusetts electric rates that are already among the highest in the nation.

“The increases produced by the proposed rules, when combined with other pending cost increases, could raise the electric bills of Massachusetts employers some 10 percent in the next year alone.

“These regulations are ultimately unnecessary. The administration could have chosen to work with the legislature to change the Global Warming Solutions Act to allow for alternative ways for the electricity sector to meet these obligations.  Instead, the administration has turned a blind eye to the corrosive impacts that high electric rates are having on struggling Massachusetts companies.

“The cost increases produced will harm consumers as well through higher rents, taxes and other costs of doing business.   

“AIM supports clean energy and is a leader in working with the administration to transition the power sector to cleaner sources.  These regulations are a setback to that effort."

Topics: Massachusetts economy, Environment, Energy

New Solar Subsidy Program Gets It Right

Posted by Robert Rio on Feb 2, 2017 2:00:00 PM

The Massachusetts Department of Energy Resources (DOER), after months of public comment, released on Tuesday its proposal for a new solar-energy incentive program to replace the complex and overly expensive program now in place.

solarpanels.small.jpgWe think the state got it right. And employers and other electric customers will be the better for it.

The proposal adopts suggestions made by AIM to rely on market competition to establish the amount of incentives that developers will receive to install solar energy. The result will be a program that costs half as much as the current one and still encourages the development of solar installations throughout the commonwealth.

Total savings to employer and other electric ratepayers: $250 million per year.

The new program will eliminate Solar Renewable Energy Credits (SREC), one of two methods through which solar developers currently collect subsidies. The other, net metering credits, will remain unchanged.

While some of the details are still being worked out, the new program, called the Solar Massachusetts Renewable Target program or SMART program, will establish a solar tariff rate only after bidding is complete for an initial 200 megawatt block of solar projects. Developers will receive that bid price for 20 years.

That incentive rate will remain the same for all solar projects and will automatically decline 4 percent for every 200 MW block in the future. There will be some “adders” to the base price - for building-mounted systems, solar canopies, and cases in which solar is combined with storage technologies - that would add small amounts to the baseline price.

Projects may still receive net metering credits, but those will offset the tariff to determine the final subsidy. So if the base rate is established at 15 cents and the developer receives net metering credits of 10 cents, the utility will make up the 5-cent subsidy through the tariff.

AIM opposed the scope of the current solar program and was concerned that early proposals for the new program relied on government officials to set tariff levels for solar incentives without using the competitive market to drive down costs to the ratepayer. Such a system would fail to pass along to the ratepayer the 50 percent reduction in solar installation costs that have occurred over the last few years. 

Driving down costs is important for the future of the Massachusetts economy. Massachusetts not only has one of the highest electricity costs in the country, but one of the most generous solar and renewable incentive programs, adding up to nearly $1 billion in 2016 and $2 billion by 2020. Those subsidies add up to nearly 4 cents per kilowatt hour for individual customers even before the new solar incentive program kicks in.

AIM, in a series of comments, urged DOER to adopt a model based on competition. Other states where solar installations cost half as much as Massachusetts already use the competitive model.

Read First Set of AIM Comments

Read Second Set of AIM Comments

Competition reduces prices. Competition is also the hallmark of the recently passed Massachusetts energy bill, which requires utilities to solicit market proposals for hydropower and offshore wind, a notion AIM supports.

The solar proposal still needs to go through public comment and any tariff needs to be approved by the Massachusetts Department of Public Utilities. During the transition period between now and the point at which the new program is approved by the Department of Public Utilities (DPU) – expected January 2018 - the existing solar incentive program will remain in place at a lower incentive rate.  

DOER has developed a program that is well thought-out and enjoys wide support. AIM commends DOER for this step in the right direction and we look forward to working with the Baker Administration and others to get this program approved and implemented as soon as possible. 

If you are interested in following this issue and engaging with AIM on Massachusetts electricity prices, contact me at rrio@aimnet.org or 617-262-1180

Review the DOER Proposal

Topics: Energy, Solar Subsidies

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