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Massachusetts credits market

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Massachusetts completed its final renewable portfolio standards (RPS) rules in February, five years after the state's legislature passed the RPS into law. The rules include tradable renewables credits and a requirement for retail energy suppliers to acquire at least 1% of their energy from renewable resources by 2003 and 4% by 2009. The Massachusetts energy resource department also ruled that all the state's retail utilities must comply with the law despite requests by some for an exemption (Windpower Monthly, November 2001).

The legislature mandated the RPS when it deregulated the state's utilities in 1997. In the long run, the requirement is expected to significantly increase the amount of renewables bought by Massachusetts' retail electric customers. It may not, however, immediately result in new renewables power being generated within the state because power plant built since 1998 are eligible. David Wooley of the American Wind Energy Association believes there may be enough existing biomass and landfill gas generation to satisfy that first obligation.

Other features of the RPS include a price cap on the cost of the program. Instead of developing or buying qualifying energy to meet the minimum standard for the amount of renewable power in their supply portfolios, utilities have the option to pay US$0.05/kWh into a renewable energy trust, which will develop qualifying generation. "The idea here is to cap the cost of compliance with the RPS," Wooley says. "A number of states are considering this. It avoids the potential problem of the RPS collapsing due to a shortage of supply. High prices tend to undermine the political viability of an RPS."

Imported electricity is eligible under the RPS, but it must come into the state through the Northeast Independent System Operator (NE ISO), which penalises intermittent generators like wind with onerous energy imbalance charges. That is one thing that needs to be worked on, according to Wooley, but the restriction could be lifted when the NE ISO and New York ISO merge in the coming months. "This is a big step forward for Massachusetts and it's a good program that will stimulate other renewables," Wooley says. "I hope other states will follow, especially New York."

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