Green energy costs raising concerns

August 10, 2013 by  
Filed under Green Energy News

Mandates account for 5.4% of monthly bill


A clarifying statement issued by National Grid in response to this story is attached at the end.

The rising cost of green energy mandates in Massachusetts is starting to raise concerns, with one utility estimating the state’s renewable energy initiatives currently account for 5.4 percent of a typical customer’s monthly bill and are expected to take a much larger share in the next few years.

National Grid, in response to a request from CommonWealth, estimated its typical electricity customer is currently paying $3.95 a month to support the state’s primary renewable energy initiative, a cost that is expected to rise another dollar a month by 2015. Grid officials said a secondary subsidy for renewable energy development, called net metering, currently costs ratepayers 9 cents a month, but is forecast to rise to 23 cents a month by the end of the year and to 93 cents a month by 2015.

The current $4.04 monthly cost of the two green energy mandates represents 5.4 percent of the typical Grid customer’s monthly bill of $74.38. Grid officials say state energy efficiency mandates cost the typical customer another $4.70 a month.

The National Grid estimate is the first attempt to assess the cost of the state’s green energy initiatives, most of which are more than five years old. The Patrick administration has commissioned a study of the costs and benefits associated with its initiatives promoting solar power, the most expensive form of renewable energy, but nothing has been released yet. The cost impact of green energy mandates is difficult to unravel because they are typically not separated out on customer bills.

The Patrick administration has said it wants to reduce subsidies for solar power developers in the future, but hasn’t yet explained how it will reduce ratepayer subsidies while continuing to promote rapid growth of the industry. Attorney General Martha Coakley, utility officials, and others have been pressing the Patrick administration to take ratepayer impacts into account when developing the new solar policies.

Coakley, in written testimony, urged Patrick’s Department of Energy Resources to hold off setting new solar policies until the cost of the old policies is fully understood. “The attorney general urges the department to more fully address mitigation of ratepayer impacts in future presentations on a going forward basis,” Coakley said in her testimony. “The department should include in its presentations estimates for ratepayer bill impacts and total program costs, as well as a substantive description of why it believes the program design will control ratepayer costs and exposures.”

Both National Grid and Northeast Utilities, the parent company of NStar, submitted testimony supporting the goals of the solar program but raising concerns about its costs. Grid’s Ian Springsteel, the utility’s director of regulatory strategy, submitted testimony saying the price supports for solar “are set at very high levels relative to the revenues necessary to incentivize solar installations.” Jeffrey S. Waltman, manager of power planning and supply for Northeast Utilities, said solar subsidies at their current levels burden “ratepayers with unnecessary costs while overcompensating solar project owners for reasonable development costs that should more appropriately be borne by the project owners themselves.”

Mike Hachey, vice president for regulatory affairs at TransCanada, which sells electricity in New England, raised concerns about rising costs at a recent State House hearing on solar. He said after the hearing that commercial/industrial electricity prices in Massachusetts, which are currently fifth-highest in the nation, could rise to No. 2 behind Hawaii in coming years due to clean energy mandates.

The cost of green energy mandates has become an issue in many states around the nation, but legislative efforts to reverse course on some of the mandates has been unsuccessful, even in heavily Republican states. The Wall Street Journal reported in July that 14 of the 29 states that require use of wind, solar, and other renewable have considered proposals this year to water down or repeal the mandates but none have passed.

North Carolina, for example, passed a law in 2007 requiring renewable energy to account for 12.5 percent of the state’s electricity sales by 2021. Duke Energy Corp., North Carolina’s largest utility, estimated the mandate was costing customers about 19 cents a month. A legislative attempt to roll back the mandate failed to make it out of committee, largely because opponents feared it would hurt job creation efforts.

Massachusetts law requires electricity sellers to obtain 8 percent of their power from renewable sources this year, rising to 15 percent by 2020.


National Grid clarifying statement:


In response to a straightforward request by the author of the article, National Grid provided basic rate impact information to Commonwealth magazine without any comment about the underlying programs. Upon reading the article that uses that rate information, we have become very concerned that the content of the article may leave the impression that we are now criticizing the advancement of renewable energy in Massachusetts. Our position is quite the opposite. We have been strong supporters of the renewable energy objectives advanced by the policy leaders in Massachusetts and continue to be supporters. Renewable energy production reduces carbon emissions and creates needed power generation diversity in the region. The article reports on the cost of renewables and their percentage of the typical bill.  We see this as an investment in our green energy future.  The renewable programs are bringing environmental benefits, the cost of which make up only a small percentage of the typical bill.  From time to time, we do offer our constructive opinions about the means that are chosen to meet the renewable objectives, but that is always done in a spirit of cooperation and support. If we believe there are more cost effective ways to meet the renewable goals for our customers, we will not hesitate to offer our views. But we stand by our commitment to renewable energy development, as well as our energy efficiency programs which have been in place for over two decades in Massachusetts. In particular, those energy efficiency programs have always brought and continue to bring substantial environmental benefits and cost savings to our customers in the near and long term. 

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