On April 7, 2022, the Massachusetts Senate Ways and Means Committee released its response to a previous House Ways and Means bill (#4524). The Senate Bill, Senate No. 2819, revised a number of features of the previous House bill relating to the supply of offshore wind energy to the Commonwealth, but also addressed a series of questions focusing on issues climatic. The Senate bill also included a series of provisions aimed at advancing electric vehicles, other forms of renewable energy, real estate development that advances climate goals and fundamentally changes consumer options by eliminating the competitive market. retail electricity supply and decarbonizing the natural gas industry, as summarized below.
And after? We understand that the Senate will be accepting amendments to the bill over the next few days and will likely adopt a form of Senate No. 2819 later this month. The House will likely pass a different version of the bill, which will lead to the creation of a conference committee to work out the details of a final bill by the end of the session this summer.
Wind at sea
The Senate has proposed a number of changes to how offshore wind resources are purchased by electric utilities. The bill retains a regular utility procurement process with the goal of having contracts for 5,600 MW in place by summer 2027. The Massachusetts Department of Energy Resources or “DOER” will now select winning bids based on specified factors with a bit more emphasis. on economic development and advancing environmental justice concerns. Successful bids will continue to be subject to a “ceiling price”, which is the level of the bid from the previous solicitation. The Senate bill, however, allows for an adjustment or discount to a new bid price of the amount of bid initiatives aimed at economic development, including benefiting low-income communities. Payments to utilities to compensate them for the risk of contracting will be reduced from 2.75% of annual revenue to 1.25%.
A number of features have been added to accelerate the adoption of electric vehicles. Substantial funding has been made available to encourage the purchase of electric vehicles and also to support the development of charging stations. Rebates for EV purchases will be paid at point of sale. The sale of non-electric vehicles will be banned by 2035. There are similar mandates for mass transit and a requirement to adopt customer choice policies on ride-sharing services such as Uber or Lyft.
An additional $50 million is available to support the construction of charging stations, with a focus on accessibility and economic equity and a greater level of coordination at the state level. New or renovated buildings will have to install infrastructure to recharge at least 10% of the parking spaces. New time-of-use rates have been mandated to advance the economics of electric vehicle charging.
Renewable or clean energy
The Senate bill provides $100 million in funding to support new energy resources, specifically citing “deep” geothermal and geothermal resources and even nuclear fusion. Funding can also support offshore wind industry infrastructure, including port development.
DOER has been tasked with updating Massachusetts’ Solar Program or “SMART” and providing more flexibility to advance solar development. Solar development has been encouraged on agricultural land.
Energy storage was further encouraged, with a focus on longer-term projects. DOER was tasked with conducting a study on how to move implementation forward, including requiring requests for storage resources from electric utilities.
Biomass resources have been excluded from a number of clean energy subsidies.
The bill also requires a more formal process for reviewing the future of the natural gas industry, requiring a formal decision on gas utility plans; the DPU has advanced a collaborative process with gas utilities taking the lead in developing a range of options for industry to help achieve Commonwealth clean energy targets. Particular emphasis is placed on how to focus ongoing replacement programs for leak-prone lines given the uncertain future of the industry.
Communities are also allowed to experiment with zoning provisions that require fossil-free new construction, such as prohibiting new gas line connections.
The Senate bill profoundly modifies the competitive electricity market by proposing to prohibit the creation or renewal of existing supply contracts for residential customers, outside the municipal grouping (which is not concerned by the draft law). A number of studies have shown that low-income customers have suffered in the competitive supply market.
As noted, we expect a major energy bill to pass this session. We also expect an important process to be put in place through a conference committee. The proposed legislative language, in its current form, would surely create winners and losers among the various players in the state’s energy sector. Interested parties should seek to monitor this process, or seek ways to shape the outcome, as proposed features are refined or discontinued and new provisions emerge.