Incentivizing Canadian Imports into Massachusetts: Act II

When the Massachusetts Legislature recessed this summer without enacting the Clean Energy Bill, many stakeholders assumed the issue of creating incentives to encourage Canadian hydro imports would be deferred until the next legislative session and the next Administration. Not quite. Taking a page out of Gina McCarthy’s playbook, the Massachusetts Department of Environmental Protection has decided to rely on its existing statutory authority under the Global Warming Solutions Act (“GWSA”) to promulgate new regulations to accomplish, in essence, what the Legislature declined to do. MassDEP has issued a “discussion draft regulation” designed to implement a Clean Energy Standard (“CES”) for electricity sold to Massachusetts consumers. The CES would apply to all entities that sell electricity to Massachusetts consumers: investor-owned utilities that supply basic service, all competitive suppliers and municipal light departments. It would require that a percentage of the electricity sold by those entities be supplied from “clean generation units.” Like the Renewable Portfolio Standard program, that percentage would likely increase annually.

At a packed stakeholder meeting held yesterday at MassDEP, Commissioner David Cash explained that this initiative is driven by the agency’s belief that the requirement of reducing 1990 greenhouse gas emission levels by 80% by 2050, as mandated under the GWSA, cannot be achieved without taking additional steps to reduce emissions in the electric power generation sector. He said the agency intends to commence a formal rulemaking on draft regulations by the end of 2014. At this point, DEP is seeking written comments on the draft discussion regulation by Monday, November 3rd. If more time is needed to provide comments, DEP said that parties should communicate to DEP a date by which they intend to submit comments. DEP staff also expressed some willingness to meet with stakeholders in person. Mass DEP has posted background materials on the draft discussion standard.

Some of the key aspects of the draft proposal likely to be addressed in comments include:

  • Does the GWSA provide DEP with sufficient authority for the promulgation and enforcement of a CES?
  • Is a new standard necessary or should the existing RPS and RGGI programs remain the primary vehicles for accomplishing higher greenhouse gas reductions?
  • Should existing nuclear generating facilities and existing pumped storage facilities be allowed to qualify as “clean generation units”? If not, are they less likely to continue operating and would they be replaced in the short run by more fossil-fueled generation?
  • What percentage of the electricity sold to customers should be targeted initially and over time?
  • Will a CES be a sufficient incentive for Canadian suppliers compared to the long-term power purchase agreements envisioned in the Clean Energy Bill?

Perhaps the most significant question, however, is whether the next Administration will support or shelve this initiative. Stay tuned.