CLIMATE CHANGE is real. So too is a massive transformation underway of electric power generation markets and transmission networks. That transformation is largely driven by public policies focused on electrification of vehicles, buildings, and industrial processes. This electrification, to achieve climate goals, will depend increasingly on electricity from wind and solar resources.
Implementing these policies requires a shared understanding of the parameters of clean, safe, and reliable energy, equity, affordability, risks about future prices and costs, technical feasibility of alternatives, international conflicts, and even the future of utilities, which are charged by law to provide reliable service at reasonable costs. Faced with markedly different perspectives and agendas among stakeholders in the early 1990s, a structured collaborative process produced outcomes that benefited consumers, lowered energy demand growth, and provided utilities with incentives aligned with public policy. It needs to happen again.
Given the long list of uncertainties about climate policies, and related impacts on power costs and reliability, plans should be substantive, realistic, and flexible, recognizing that the path to success is unlikely to be a straight line. They should reflect and respond to evolving technologies, such as battery storage, and to dramatic changes in electricity infrastructure as the system adapts to intermittent but clean generation from wind and solar. They should reflect increases in both power demand and end-use efficiencies. And they should consider the evolving roles of regulated and unregulated electric and gas suppliers and the need for inter-utility coordination.
Massachusetts policy leaders have established urgent timelines to address concerns about climate impacts. One example is Gov. Maura Healey’s eight-year goals to install 1 million heat pumps, put 1 million electric vehicles on the road, and achieve 100 percent clean electric generation — all by 2030.
This is an immense task. Massachusetts has roughly 2 million buildings and 3.1 million registered cars. The task is especially daunting with the array of intensely held perspectives and positions among stakeholders. A few examples:
- Environmental advocates see climate change as an existential threat causing increasing temperatures, more intense hurricanes, and rising tides, and see electrification to replace fossil fuels as a key part of the solution.
- The demand on New England’s electric system, already groaning under pressures of weather and load growth, is projected to double to accommodate electrification. And electric utilities, power producers, and those responsible for transmission grid reliability face an increasingly complex network of distributed and intermittent generation, such as solar, wind, and battery storage. They see growing investment risks, not just for new projects but for existing facilities that may become obsolete.
- Independent power producers and transmission builders must be able to design, permit, finance, and then build increasingly complex power systems, often involving new and emerging technologies, and often facing strong local opposition.
- Gas utilities, whose shareholders anticipate a reasonable return on prudent investments in exchange for rate regulation, face potential accelerating obsolescence of a substantial fraction of their physical capital.
- Many low- and middle-income households struggle to pay energy bills, already up as much as 64 percent this winter as part of the highest inflation since November 1981. There is little relief in sight given the substantially higher costs anticipated to meet future electrification requirements.
- Policies and plans have yet to address financing of future costs, estimated by one of the authors to exceed $5 billion just to electrify Massachusetts low-income households – and more than $9 billion if electric vehicles are included. That would be unaffordable without help.
- Gas utility workers, automobile mechanics, and other skilled workers face disruption to their livelihoods. As do oil dealers.
With challenges come opportunities, however. Investments by government, businesses, and households can help deploy technologies — such as geothermal heating, long duration batteries, and green hydrogen, along with small and large-scale solar and wind projects — and create jobs. But how are the investment risks to be allocated among investors, ratepayers, and taxpayers?
The challenge is for those with differing views to listen more closely, appreciate each other’s legitimate concerns, understand economic impacts and technological limits — and try to reach consensus while noting that the path to success may involve multiple detours on the way to the agreed destination.
In the 1990s, the authors, and many others, worked through a collaborative process to restructure the electric utility industry and to develop and implement comprehensive, large-scale energy efficiency programs. Consumers, advocates’ constituencies, and utilities benefited then and are still benefiting today. Those involved achieved consensus on policies and programs that responded to an array of stakeholder needs. Energy efficiency mandates and low-income and other customer protections were codified, and utility impacts were addressed. Today, Massachusetts is among the nation’s leaders in energy efficiency programs.
There is no time to waste in starting a similar all-stakeholders conversation to develop a consensus on Massachusetts’ response to climate change.
In the early 1990s, Jerrold Oppenheim was an assistant attorney general, Carl Gustin was a Boston Edison Company senior vice president, and Theo MacGregor was conservation chief of the Department of Public Utilities. They are now, respectively, counsel to the Low-Income Energy Affordability Network, a consultant and columnist, and retired energy consultant.