Vital part missing in Massachusetts

Proposals for a Massachusetts Renewables Portfolio Standard (RPS) have at last been released -- nearly four years after legislators restructured the state's electric power industry. But the RPS falls short of targets advocated by renewable energy lobby groups -- and does not include provision for tradable renewable energy credits.

An RPS, which obliges all electricity retailers to comply with a minimum standard for the amount of renewables power in their supply portfolios, was part of the original 1997 restructuring legislation for the Massachusetts power market. But a long delay ensued, caused by the reluctance of electric distribution companies such as NStar and Massachusetts Electric to participate. The rules were finally released last month by the state Division of Energy Resources after lobbying by MassPIRG, a consumer advocacy group, the American Wind Energy Association and others.

NStar, with one million customers in eastern Massachusetts, had wanted to exclude distribution companies from the regulations, saying it would have to charge retail customers more if forced to supply more expensive renewable energy. The Division of Energy Resources, however, has included both distribution and generation utilities in its rules, calculating small increases in customer bills of no more than a handful of dollars a year -- $0.15 each month in 2003, rising to $0.60 each month in 2009.

The draft rules, now available for public comment before going into effect early in 2002, call for a gradually increasing proportion of energy from new renewable resources in the state from at least 1% by the end of 2003 to 4% in 2009. Renewable resources under the rules do not include hydroelectric staions. After 2009, the proportion could increase by 1% a year at the discretion of the Division of Energy Resources, which will study the market every five years beginning in 2007 to determine whether further purchases should be suspended.

Only half an RPS

The Massachusetts rules, however, fall far short of the model RPS set out by the Union of Concerned Scientists (UCS) in its "Energy Blue Print," released in mid October. It calls for 10% of the nation's energy to come from renewable resources by 2010 and 20% by 2020, far less than the Massachusetts' 4% by 2009. There is provision, however, for the Massachusetts target to be increased to 15% by 2020 if Division of Energy Resources market studies prove positive for more renewables development.

Another important stipulation from the UCS is that an RPS include tradable renewable energy credits that function in a similar way to the US Clean Air Act emission trading system. "This market based approach provides the greatest amount of clean power for the lowest price and creates an ongoing incentive to drive down costs," the report says.

Today just 12 states in the US have some form of RPS. Among the UCS report's recommendations for national energy legislation are requirements that all retail electric providers participate.