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Utility Long-Term Contracting Bill Equaling ~50% of Retail Market Sent To Governor Reverts To Giving Utilities Discretion On How To Use Power, May Use For Default Service (Final Version Removes Mandate That Products Be Sold Into Market)

August 2, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A final version of the Massachusetts long-term hydropower and offshore wind bill now sent to Governor Charlie Baker reverts to earlier language that gives electric distribution companies discretion on how to dispose of products procured under the contracts.

The bill, now H.4568 and enacted by both the House and Senate, would require the EDCs to solicit long-term contracts for 9,450,000 megawatts-hours of, "clean energy generation," and 1,600 megawatts of offshore wind power, which is equal to about 50% of retail sales in the state

"Clean energy generation," is defined as either: (i) firm service hydroelectric generation from hydroelectric generation alone; (ii) new Class I RPS eligible resources that are firmed up with firm service hydroelectric generation; or (iii) new Class I renewable portfolio standard eligible resources

As previously reported, an earlier version of the bill (as S.2372) passed by the Senate had mandated that EDCs shall sell any energy and capacity purchased under a long-term contract in the wholesale market, such that the products would not impact basic (default) service (EDCs retained discretion as to the disposition of RECs).

However, H.4568 as enacted dropped this provision, and reverted to earlier language giving the EDCS discretion as to the disposition of all products procured under the contracts.

Specifically, as enacted, H.4568 provides with respect to the long-term clean energy procurements, "An electric distribution company may elect to use any energy purchased under such contracts for resale to its customers, and may elect to retain renewable energy certificates to meet the applicable annual renewable portfolio standard requirements."

"If the energy and renewable energy certificates are not so used, such companies shall sell such purchased energy into the wholesale market and shall sell such purchased renewable energy certificates attributed to Class I renewable portfolio standard eligible resources to minimize the costs to ratepayers under the contract; provided further, that a distribution company shall retain renewable energy certificates that are not attributed to Class I renewable portfolio standard eligible resources," H.4568 provides

If a distribution company sells the purchased energy into the wholesale spot market and auctions the renewable energy certificates, the distribution company shall net the cost of payments made to projects under the long-term contracts against the net proceeds obtained from the sale of energy and renewable energy certificates, and the difference shall be credited or charged to all distribution customers through a uniform fully reconciling annual factor in distribution rates, subject to review and approval of the department of public utilities, H.4568 provides

Similar language applies to the offshore wind procurements

H.4568 also provides that on or before December 31, 2016, the department of energy resources shall determine whether to set appropriate targets for electric companies to procure viable and cost-effective energy storage systems to be achieved by January 1, 2020.

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