Common Ground in Both Energy Bills

With the clock ticking away on this legislative session, Massachusetts is again on the verge of passing important legislation which will have a definite impact on the energy marketplace in the Commonwealth.

Last week in this space, we called to your attention a proposed amendment to the House of Representatives energy bill which stood to benefit cities, towns and state entities by streamlining the procurement process for renewable energy projects. We are pleased to report that this amendment, supported by PowerOptions and others, has cleared the House and is now set to be considered by the joint House/Senate conference committee which will settle on a final bill. While not included in the Senate version of the energy bill, this provision is not in conflict with any provision in the Senate bill and should be included in the final bill, for all of the reasons we stated before.

The proposal clarifies and consolidates the process for municipalities and state agencies to procure renewable power on state or municipally owned land by giving them the option to opt into a competitively procured power purchase agreement through consortiums like PowerOptions. This would allow public entities to do what they have been doing with more traditional means of power generation for the past 14 years under contracts that have delivered valuable savings to cities and towns, including lifting the burden of a costly procurement process and complex contracting language.

But, there are many differences between the two bills and reconciling them will be a challenge. Given the short timeframe, priority should be given to provisions which fix problems identified since the enactment of the Green Communities Act and clear the way for full and prompt implementation of the policy objectives set forth in the Act. Among the easier fixes in this bill include the procurement rules addressed by the House as well as issues related to property taxes imposed on renewable energy projects and lifting the cap on net metering credits.

Both bills establish a statewide approach to determining the appropriate taxation of such facilities, albeit slightly differently. The versions are not far apart and either version makes sense. It should not be hard to reach compromise here. Individual municipal determinations of property taxation for each renewable project greatly hamper development and can kill projects where the tax assessment is excessive. This has to be fixed and quickly.

Both bills increase the amount of renewable energy generated which public and private entities can then sell back to the electric grid – increasing it to 3 percent. Here the two branches of the Legislature are together.

The differences in the bills lie mostly around long term contracts entered into by utilities and regulatory reform. As we have espoused in the past, regulatory reform is also sorely needed, particularly around rate structure and rate design. But these are very complex problems and consensus in three weeks will be hard to reach. The fixes to procurement issues, property taxes and net metering credits should not be delayed pending agreement on these other bigger picture policy areas.

We support the House and Senate efforts to encourage greater development and utilization of renewable energy while ensuring that all our energy efforts work together and, on the whole, create a better operating environment for businesses, institutions and people in the Commonwealth. Hopefully in these last few weeks of this legislative session, both sides can come to consensus and complete this important legislation.

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