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Massachusetts utilities must forge contracts with offshore wind firms under the energy bill passed by the state Legislature on July 31, 2016.

(Wikimedia Commons)

A compromise energy bill passed by the Massachusetts Legislature Sunday night is eliciting diverse reactions, particularly around its mandate that utilities contract for large amounts of renewable energy over the next two decades.

The bill requires that electric companies such as Eversource and National Grid collectively contract for 1,600 megawatts of offshore wind leading into 2027, and also buy 9,450,000 megawatt hours of hydropower and other renewables such as onshore wind every year.

A trade group that represents power plants cried foul on Monday.

"This energy bill represents the single biggest step away from a competitive electricity market ever taken in New England," said Dan Dolan, president of the New England Power Generators Association. Dolan said the bill will "dramatically increase costs for consumers" and undermine billions of dollars of energy investments already made in the state.

He stated that power plant owners in Massachusetts "will now be barred from competing for nearly sixty percent of the commonwealth's electricity market" and added that in the last 18 months, the region has seen low sustained wholesale electricity prices due to competitive markets.

"Over 4,200 megawatts of retiring power plants have been replaced in the competitive market without long-term contracts or state guarantees," Dolan said.

Meanwhile, a spokesman for the offshore wind industry praised the bill, saying it will lead to clean air, a vibrant clean-tech economy, and ultimately, lower prices for consumers.

"Sixteen-hundred megawatts is a tremendous start," said Matthew Morrissey, director of Offshore Wind Massachusetts, a consortium with headquarters in New Bedford. "It will kickstart the industry and bring down costs."

Wind developers will compete for the contracts, he said, exerting downward pressure on prices. As an additional protection to consumers, each procurement, spaced 24 months apart, must by law be more cost-effective than the last.

"There will be fierce competition for those early contracts," Morrissey said, naming Deepwater Wind, DONG Energy, and Offshore MW, three developers that now hold federal leases in the designated area about 15 miles south of Martha's Vineyard.

Morrissey said legislators were "extremely thoughtful and deliberative" and that Massachusetts has some of the best offshore wind potential in the world.

Morrissey estimated that the price of offshore wind will be lower than the cost of fossil-fuel power by the year 2030. "We're very excited," he said. "As market volume increases, costs will come down." He said other east coast states are looking at offshore wind imports.

Other apparent winners are developers of large-scale transmission projects to carry hydro and onshore wind from points north into New England.

The Vermont Green Line would go 60 miles under Lake Champlain to transport high-voltage direct current electricity from dams in Canada and turbines in New York to New England markets. It's a proposal by Anbaric and National Grid.

The developers Monday praised the bill, saying it "embraces competition" to add renewables to the Bay State, and will help meet climate goals in a way that is cost-effective. Onshore wind and hydropower can act "as an efficient bridge to offshore wind development," Anbaric and National Grid said.

A spokesman for Eversource Energy, with its electric and natural gas utilities, natural gas pipeline investments with Spectra Energy Partners, and $2 billion financial stake with Hydro-Quebec in a controversial transmission plan known as Northern Pass, responded to a request for comment Monday.



"We're still reviewing the bill's provisions to determine what impact it will have on our customers and our company," said Michael Durand, noting that the bill had "just recently emerged from the State House."

Under the bill, electric distribution companies would be able to recoup the cost of contracting for renewables by billing their customers, and would also receive an annual incentive of 2.75 percent of contract costs. A utility may decline any proposal that places an "unreasonable burden on its balance sheet," provided steps were taken to prevent such an outcome.

Environmental groups generally expressed happiness. "The Massachusetts Legislature hit a home run tonight," said the National Wildlife Federation on Sunday.

According to Ken Kimmell, president of the Union of Concerned Scientists, Massachusetts is "blazing a trail" by cutting reliance on coal and natural gas for power generation. "This bill provides a blueprint for diversifying electricity sources, cutting pollution, stabilizing electricity prices, and boosting the state economy."

Other environmentalists took a more measured approach. The coalition Mass Power Forward noted with approval that the bill would make utilities repair their worst natural gas leaks, which has been a major issue for activists.

However, the group panned the bill for failing to outlaw what it calls "the pipeline tax," a mechanism approved by state utility regulators where electric companies would contract for firm capacity on natural gas pipelines, release that capacity to power plants, and pass the costs to their ratepayers. It would unfairly subsidize fossil fuel infrastructure, the group has charged.

An amendment to prohibit the practice was included in the Senate bill, but failed to make it out of conference committee.

"The pipeline tax issue is now in the hands of the courts and the Baker administration," said Joel Wool of Clean Water Action. The state's Supreme Judicial Court is currently considering whether the mechanism is lawful.

Mass Power Forward criticized the bill for failing to expand the state's renewable energy portfolio standard, but praised language that would create a panel to guide the decommissioning of the Pilgrim nuclear power plant in Plymouth.

The Baker administration previously voiced support for adding pipeline infrastructure. "Incremental gas capacity, plus hydro, would yield the greatest savings in cost and greenhouse gases," said energy and environment secretary Matt Beaton in May.

A year ago, Baker filed legislation to import 2,000 megawatts of hydropower, saying it would not only increase regional grid reliability but provide ratepayers with "a clean, cost-competitive alternative to coal and oil generation."

Aside from cost and reliability, Massachusetts must meet steep carbon emissions reduction targets mandated under its 2008 Global Warming Solutions Act.

This story has been updated to clarify a statement from Eversource Energy.