What You Need to Know about the New State Energy Law

Cynthia A. Arcate, President & CEO, PowerOptions

February 5, 2013

The energy bill signed into law at the end of the last year’s legislative session will have a significant impact on the energy sector in Massachusetts. The bill, An Act Relative to Competitively Priced Electricity in the Commonwealth, both expands and contracts several dimensions of the Green Communities Act of 2008 (GCA), which was sweeping legislation designed to greatly expand the state’s commitment to energy efficiency and renewable energy. The new bill should also provide some rate relief for commercial and industrial (C&I) class customers and encourage further renewable energy development.

While most of the news coverage focused on expansion of incentives and opportunities for renewable energy, the new law also includes numerous rate related provisions which should serve to better control the cost to consumers from the GCA. For example, the law mandates a 10 percent cap on any rate increase and requires amounts above that to be phased in over time, which will help provide more budget certainty in energy costs. Another rate concern is also addressed: Recovery of utility costs through surcharges that are outside base rates, of which C&I customers pay a disproportionate share. This section directs the Department of Public Utilities to design “trackers” based on cost contribution, which should result in savings to nonprofit C&I customers.

The new law also provides an increase in Net Metering Credits for renewable energy projects, which are given by the local utility when onsite renewable energy production exceeds consumption. These credits have been used to develop larger remotely located “utility scale” projects and the credits are assigned to customers, directly offsetting costs on their bills. The new law increases the cap on the amount of these credits the utilities must provide from 3 percent of each utility’s peak demand (1 percent allotted to private entities and 2 percent for public), to 6 percent (3 percent each for public and private customers). This expansion will greatly aid in the continued growth of renewable energy, especially solar, as it makes renewable energy projects more economically feasible.

The new law helps tweak the Green Communities Act and brings the Commonwealth a step forward in rate design, reducing unfair burdens on C&I customers. It also nurtures Massachusetts’ renewable energy market, one of the fastest growing industries in the state.

About PowerOptions

PowerOptions® is the largest energy buying consortium in Massachusetts, serving more than 500 nonprofit organizations and governmental entities with combined annual energy purchases or $175 million. With supply programs for electricity, natural gas and solar power, PowerOptions provides its members budget certainty and savings, as well as best-in-industry consumer protections not available anywhere else. Joining is easy—any nonprofit or public institution in Massachusetts may become a member and participate in this collective purchasing effort. For more information, visit www.poweroptions.org.

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