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Massachusetts Adopts Rules On Disposition, Cost Recovery Of Long-Term Utility Generation Contracts
The Massachusetts DPU has adopted rules implementing certain recently enacted statues requiring 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 (see details here).
As previously reported, the adopted version of legislation gives the EDCs discretion as to the disposition of all products procured under the contracts.
"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
Under the adopted DPU rules, for the "clean energy" generation, after purchasing energy and RECs a distribution company may:
(a) Sell the energy to its basic service customers, and retain RECs for the purpose of meeting the applicable annual RPS requirements; or
(b) Sell the energy into the wholesale electricity spot market, and sell the purchased RECs attributed to Class I RPS-eligible resources to minimize costs to ratepayers, provided that a distribution company shall retain RECs that are not attributed to Class I RPS-eligible resources.
Under the adopted DPU rules, for the offshore wind generation, after purchasing energy and RECs a distribution company may:
(a) Sell the energy to its basic service customers, and retain RECs for the purpose of meeting the applicable annual RPS requirements; or
(b) Sell the energy into the wholesale electricity spot market, and sell the purchased RECs to minimize costs to ratepayers, provided that DOER has not notified the distribution company that the RECs should be retained to facilitate reaching emission reduction targets.
In both cases, the rules also establish cost recovery processes if the EDC "sells" the generation and RECs (note that under the language used, this would ostensibly include selling the energy to default service customers), and where the EDC "sells" such output, it shall, "Credit or charge all Customers the difference between the contract payments and proceeds through a uniform, fully reconciling annual factor in distribution rates, subject to review and approval by the Department." (in other words, a nonbypassable charge, regardless of whether used for default service)
Docket D.P.U. 16-191-A
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March 9, 2017
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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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