What’s Happening on Beacon Hill –– Your End of Session Guide on Climate Policy

BY TIM CRONIN, First Posted JUNE 28th 2018

~Last update: Monday, July 30th, 2018 @ 8:00 pm ~

Yesterday (Monday 7/30) the House and Senate completed their compromise clean energy bill (H.4857), just a day before the end of the two-year legislative session. The bill will now be sent to both chambers for an up and down vote, before being placed before the Governor for approval. The Governor does not need to sign it before the July 31st legislative deadline.

This came the same day as lawmakers in both chambers approved compromise language for the environmental bond bill, which is currently sitting on the Governor’s desk awaiting final approval.

Below you’ll find a summary of the main climate change policies before the legislature this session, their status, and possible next steps.

Brief Background: the Politics of Beacon Hill

With less than 24 hours to go the clean energy conference committee released its compromise version of the House and Senate clean energy proposals (H.4857). The compromise includes:

  • A boost to the annual increase in the RPS to 2% starting in 2020. Then in 2030 a reduction back down to a 1% per year increase.
  • Codification of the administration’s proposed clean peak standard.
  • A delay to new demand charges (MMRC) on solar customers until smart meter technology is in place.
  • Authorizes 1,000 megawatt hours of energy storage.
  • Reporting requirements for lost and unaccounted for gas, caused by gas leaks.
  • An expansion of 1,600 MW in the state’s power to procure energy from offshore wind.

More details on the specific policies can be found below.

Overview

Climate Adaptation (the Environmental Bond Bill)

Status of Relevant Bills:

  • (H.4835)– compromise bill passed House & Senate, before Governor Baker

Summary
Although Massachusetts has set emission reductions targets, the state still lacks laws that address climate adaptation needs. Such legislation provides resources for municipalities, businesses, and residents to proactively prepare for the effects of climate change(severe coastal storms, inland flooding etc.). In previous sessions the Senate has passed Comprehensive Adaptation Management Plan (CAMP) legislation which has failed to gain traction in the House. In September 2015, Governor Baker signed Executive Order 569, which coordinated and expanded adaptation initiatives in his Administration but didn’t include the funding necessary for most coastal adaptation measures.

Status & Next Steps
Following severe storms this winter, Governor Baker proposed a $1.4 billion environmental bond bill which included a number of adaptation measures. Additionally, the bond bill directs significant funds towards conservation and recreation. Since being filed, both houses have amended and passed their own version of the bill (H.4613), which now heads to a conference committee. Both versions add a few billion in earmarks, spending above the original amount proposed by the Governor. Baker has signaled he will cut the majority of these earmarks before signing the bill.
The Senate version includes two crucial adaptation provisions that help residents, municipalities, and businesses better prepare for the effects of climate change. First, it establishes an advisory committee, essential in ensuring proper oversight of the implementation of adaptation policies. Second, the bill features language to create regulatory consistency with existing administration policies, significantly weakening its adaptation provisions. Based on current indications by administration officials and House leadership, these adaptation provisions have a high likelihood of being included in the final version of the bill.

The final bill was negotiated before a joint conference committee with House and Senate members. They did not include advisory committee or consistency language in the final bill, but it did include other provisions that help boost adaptation.

Energy Efficiency for Appliances

Status of Relevant Bills:

  • Not included in compromise clean energy bill

Summary
Updating energy efficiency standards is a simple way to save consumers money and reduce electricity use. Studies have estimated that updating efficiency standards could reduce electricity use in Massachusetts by 3% while saving consumers hundreds of millions of dollars a year. Using efficient products also has enormous benefits for the environment. According to ASAP, this bill will save over 173,000 metric tons of CO2 per year by 2025, which is the equivalent of taking nearly 40,000 cars off the road.

Status & Next Steps
A bill (H.4737) filed by Rep. Smizik (D-Brookline) would have updated these standards, requiring about a dozen products ranging from computers and monitors to fluorescent lamps to meet minimum energy and water efficiency standards if sold in the state.

The bill has gathered broad support from environmental organizations, utilities, industry groups (including AIM), and consumer groups. CABA also supported this bill. It passed the House on July 12th unanimously. Despite Senate and administration officials having signaled support, the proposal was not included in the final clean energy compromise bill (H.4857).

Energy Storage

Status of Relevant Bills:

  • (H.4857)– in compromise bill before House & Senate (vote scheduled for 7/31)

Summary
Expanding energy storage is vital in ensuring long-term grid resiliency when generating more energy with renewables. In the last year, Massachusetts has awarded $20 million in grants to meet new energy storage targets set by the Baker administration in 2017. If achieved, the state would add 200 MWh of storage capacity by 2020. Storage advocates argue that the goals are weak, and do not go far enough in incentivizing new storage unit development.

Status & Next Steps
The Senate clean energy bill (S.2564) set ambitious storage targets, directing the state to add 2GW of storage by 2025. The proposal limited utilities to owning up to 20% of their deployed storage projects and would charge them compliance payments if they fall behind the state’s deployment targets.

The House did propose a stand-alone bill to address energy storage and grid resilience (H.4739). If passed, that bill would have directed state research to study benefits of mobile battery storage systems, establishes a ‘Center for Clean Transportation’ on a UMass campus, and establishes an Energy Storage Innovation Research & Testing Institute. It would also have required utilities to file annual resiliency reports with the state to show load and congestion on the distribution system. H.4739 passed the House on 7/12 with overwhelming support.

The final, compromise clean energy bill (H.4857) reported out by the legislature includes a 1,000 MW energy storage target to be achieved by 2025 and an annual resiliency report requirement by utilities.

Net Metering

Status of Relevant Bills:

  • Not included in compromise clean energy bill

Summary
Net metering allows property owners to send electricity generated by their solar panel system onto the grid, in return for credit on future electric bills. Massachusetts currently sets a cap on the amount of solar that is eligible for net metering. This cap varies, but most utility service areas allow as much as 7% of their solar projects to receive net metering compensation. The majority of homeowners using solar are not affected by the cap, although projects over 10kW are heavily restricted. This includes most shared-community solar and solar projects built by towns and other large institutions.

As of January, there were 124 projects, totaling 51 megawatts of power, on hold and awaiting approval to interconnect to the grid. The projects are valued at $78 million, with the capacity to power the equivalent of 5,362 homes.

Status & Next Steps

The Senate’s clean energy bill (S.2564) included language that would eliminate all net metering caps, solving the problem of raising the cap every legislative session. In the House, a stand-alone net metering bill (H.4577) modestly increases the net metering caps from 7% to 9% of a utility’s peak load for non-municipal load, with a similar 2% increases to the cap municipal peak load. Based on current demand for net metering credits, the House’s increase of the cap will be hit immediately once lifted, doing very little to incentivize solar development. This happened after the legislature voted to raise the cap in 2016.

The House did not pass its standalone net metering bill, and the measure wasn’t included in the House and Senate compromise clean energy bill (H.4857).

Renewable Portfolio Standard (RPS)

Status of Relevant Bills:

  • (H.4857)– in compromise bill before House & Senate (vote scheduled for 7/31)

Summary
The renewable portfolio standard (RPS) is a requirement for utilities to source a certain percentage of the energy they provide to customers from renewable energy sources, such as wind and solar. The RPS for Massachusetts is currently at 13%, and increases 1% annually. In addition to reducing greenhouse gas emissions, the RPS contributes to clean energy job growth in the Commonwealth which currently employs over 100,000 Massachusetts residents.

Solar advocates argue that the state should boost the annual increase immediately from 1% a year to at least 3% a year in order to help the state meet its emission reduction goals and stimulate job growth.

Status & Next Steps
There is a good chance that Beacon Hill will boost the RPS this year, the question is by how much. The Senate included an RPS increase in their clean energy bill (S.2564). The Senate’s proposal would increase the RPS by 3% annually to achieve 100% clean energy just before 2050. This 3% increase, along with the rest of the clean energy bill, is currently stalled in the House. Meanwhile, the House passed a bill on July 12th (H.4756) that sets the RPS increases to 2% but does so slowly with incremental increases until 2020. It also reduced the increase back down to 1% in 2030. RPS was negotiated before a joint conference committee as H.4756, with the committee ultimately choosing to adopt the House’s RPS proposal.

The final compromise clean energy bill (H.4857) included a 2% increase to the RPS starting in 2020, that then dropped back down to 1% in 2030.

Carbon Pricing

Status of Relevant Bills:

  • Not included in compromise clean energy bill

Summary
At the beginning of this session, carbon pricing legislation was filed in both the House and Senate. Over the course of the session, the bills enjoyed broad support from members of both chambers, as well as widespread backing from business leaders.

In a historic step, the Senate included a carbon pricing proposal within its clean energy bill, making it the first time in Massachusetts history either chamber has passed carbon pricing. The Senate language does not impose a specific blueprint, instead of holding the Governor and his administration to specific deadlines. This would institute carbon pricing of some kind for the transportation sector by the end of 2020, for commercial and industrial buildings and processes by the end of 2021, and for residential buildings by the end of 2022.

Status & Next Steps
Carbon pricing and reducing transportation emissions still has the potential for passage this session. The House and Senate did enter into a conference committee whose scope includes the Senate’s comprehensive clean energy bill (S.2564). That bill included a provision establishing a market-based mechanism to reduce transportation and heating emissions. There was a possibility of achieving a carbon price this session if negotiators from the House and Senate had chosen to include the proposal in their compromise version. Negotiators did not include carbon pricing in their final proposal (H.4857).

Other Proposals

Anaerobic Digestion

Status of Relevant Bills:

  • Not included in compromise clean energy bill

Using recycled food and farm waste, anaerobic digestion creates gasses that can be used to produce energy and capture excess CO2. The process has been around for years, but under state law, it currently does not qualify for any available renewable energy incentives. A House bill before the House Ways & Means Committee (H.4303) would exempt anaerobic digestion from net metering caps and allow the energy produced from it to count towards a utility’s RPS. The same language is also contained within the Senate’s clean energy bill (S.2564), but was not included in the compromise clean energy bill (H.4857).

Clean Peak Standard

Status of Relevant Bills:

  • (H.4857)– in compromise bill before House & Senate (vote scheduled for 7/31)

Baker Administration officials first proposed a clean peak standard within their $1.4 billion bond bill. A clean peak standard requires utilities to use cleaner energy sources during peak periods to meet demand, which advocates had feared would open the door to natural gas expansion. Administration officials deny this is their intention. Other critics argue clean peak needs to be studied more to avoid any potential pitfalls in the policy. Officials claim to currently have the legal authority to implement a clean peak standard, but prefer to see the legislature give its approval by passing legislation. The provisions for clean peak were removed from the Baker bond bill in committee, but similar language was attached to the RPS bill (H.4756) which passed the House on Thursday (7/12). The language was included in the conference committee’s compromise clean energy bill (H.4857).

Electric Vehicles (EV)

Status of Relevant Bills:

  • Not included in compromise clean energy bill

Last session Massachusetts passed legislation to increase access to EV charging stations, allow EV specific parking spaces and study electrification of the state’s vehicle fleets. Building on this, the Senate Clean energy bill (S.2564) directs electric vehicle charging station distributors to create time-of-use rate plans for infrastructure. Whereas a standalone House bill (H.4578) establishes grants to electrify the UMASS vehicle fleet, offers incentives for private dealers to sell EV’s, and directs utilities to better prepare for wide-spread charging of electric trucks. No language on electric vehicles was included in the legislature’s final compromise bill (H.4857).

Home Energy Scorecards

Status of Relevant Bills:

  • No movement this session

Governor Baker filed legislation (H.4371) in April requiring home energy scorecards be provided by all property sellers in the state. The scorecards grade homes on insulation, windows, heating systems, and other components and direct homeowners to incentives allowing them to upgrade fixtures. The market-based approach would save residents millions of dollars in annual savings and reduce hundreds of thousands of tons of carbon emissions. No other states require such scorecards.

The policy faced fierce opposition from realtors, who fear its effects on the real estate market. An attempt to amend the Senate clean energy bill to include scorecard language failed, and Baker’s legislation is currently stalled in the House.

MMRC Payments (‘Demand Charges’)

Status of Relevant Bills:

  • (H.4857)– in compromise bill before House & Senate (vote scheduled for 7/31)

The Senate bill (S.2564) includes a proposal that clarifies the regulatory language that authorized DPU’s ruling on the Eversource rate case. The rate case authorized Eversource to add a minimum monthly reliability charge (MMRC) to customers’ bills if they net metered, effectively reducing the value of net metering. The proposal requires that customers be provided with smart metering technology before they are charged an MMRC. If passed, the law would force the DPU to reconsider the Eversource rate decision, which will go into effect at the end of the year.

Language was included in the legislature’s compromise clean energy bill (H.4857) that would limit demand charges to clean peak hours. Its uncertain at this point what effect this provision will have on the Eversource MMRC.

Public Pension Divestment

Status of Relevant Bills:

  • Not included in compromise clean energy bill

A bill filed this session (H.3281) required immediate divestment of Massachusetts state pension funds from holdings in coal and creating a commission chaired by the State Treasurer to analyze financial and environmental impacts of investments in gas and oil. The commission would recommend divestment from oil and gas, in addition to coal. The Senate added a Senator Feeney (D-Foxborough) amendment to the Senate clean energy bill (S.2564) that required divestment from coal, but did not include other divestments. The proposal was being negotiated before a joint conference committee, but was not included in the legislature’s compromise clean energy bill (H.4857).

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