MASSACHUSETTS LAWMAKERS showed some healthy skepticism about the workings of corporate America back in 2016 when they mandated that giant offshore wind farms would be part of the Commonwealth’s energy mix.
Motivated by concern about climate change and the dangers of fossil fuels, the omnibus energy bill to spur offshore wind development was an intervention into the free market in the service of promoting cleaner energy.
Recognizing that the wind farm developers and utilities would seek to maximize their profits, lawmakers imposed a competitive process, and a requirement that the second wind farm be less expensive for consumers than the first.
Voters and ratepayers were basically given a guarantee that they would not be victims of corporate greed in the name of clean energy.
This competitive process for the first wind farm worked, as the winning bid came in well below expectations. Vineyard Wind seemed at first glance to disprove the doubters who said clean energy was prohibitively expensive.
On April 12, the Friday before a holiday, the state Department of Public Utilities provided a special sweetener for the three local utilities that negotiated a contract with Vineyard Wind. Over the vociferous objection of Attorney General Maura Healey, the DPU approved “remuneration” for Eversource, National Grid, and Unitil totaling 2.75 percent of the contract’s value – the maximum allowed by law. Healey’s office argued for zero, as did the Conservation Law Foundation.
The remuneration is for carrying the offshore wind contract on their books. Commonwealth magazine estimated the value of the sweetener for the first procurement at $168 million. Quite the windfall. As the AG spokesperson pointed out, it sets a terrible precedent for future procurements. One of those future procurements is already in the works, with a proposal pending before the same DPU that is scheduled to go out for bid next month. This procurement currently includes the price cap, but the budget amendment would eliminate it. Legislators should move carefully and deliberately before repealing well-thought-out consumer protection.
Wind and utility lobbyists have been quietly working behind the scenes to eliminate the price cap, persuading prominent progressive leaders earlier this year to file a bill that would repeal the 2016 requirement that prices on successive procurements keep ratcheting down. Last week, dissatisfied with the traditional public hearing process, Rep. Patricia Haddad of Somerset, the House’s speaker pro tempore, filed an amendment to the House budget to repeal the cap. The amendment will not get a committee hearing; instead, it will be considered as part of the floor debate on the budget, scheduled to begin on Monday.
While the legislative intent of doing away with the price cap to encourage more onshore wind farm development is no doubt sincere, advancing the amendment without a public hearing is unnecessary and unwise. Short of an emergency, which sometimes is addressed through the House budget process, the integrity of the public hearing process should be supported. Some might argue that the entire procurement is being sped along to take advantage of a federal tax credit that expires at the end of this year, but that’s still no excuse for bypassing the legislative process.
Patricia Haddad is an able and serious legislator. So is Thomas Golden, the House Chairman of the Joint Telecommunications and Energy Committee. In view of the DPU’s decision last week to gift $168 million to the three utilities, Golden’s committee should be allowed to collect testimony, review legitimate concerns that Attorney General Healey, the Conservation Law Foundation,and others may have about the amendment.
And yes, in addition to the price cap, some legitimate issues such as encouraging offshore wind developers to spend more on onshore development here in Massachusetts would be a good place to start.
Jim Shaer was an assistant to former US senator John Kerry and is currently a consultant in the non-profit field.