By Zachary Gerson, Foley Hoag LLP
On January 4th, as the legislative session came to a close, both houses of the Massachusetts legislature passed “An Act Creating a Next-Generation Roadmap for Massachusetts Climate Policy.” My colleague, Seth Jaffe, posted on the act yesterday, when the details of the bill first came out, focusing on the climate and economic impacts. There is no doubt that this act will significantly shape Massachusetts’s path towards a net-zero future.
Early coverage has focused on the 2050 “net zero” greenhouse gas emissions target, but the real import of the act is likely to be in the myriad ways it updates existing policies to keep bottom-up pressure towards achieving that goal. The 2050 goal itself had already been adopted by the secretary of energy and environmental affairs under preexisting law. In fact, just a few days ago Massachusetts released a comprehensive “2050 Decarbonization Roadmap” that was quite ambitious.
Not surprisingly, many of the levers the new act pulls are embedded within familiar state energy policies. But there are some interesting new themes, like a focus on achieving emissions reductions in sectors other than the electric generation sector and an emphasis on environmental justice. Without attempting to comprehensively summarize the act (or even just its energy law components), here are some of the provisions that are likely to push energy policy in Massachusetts towards a carbon-free future...or otherwise shake things up.
- The secretary of energy and environmental affairs will now set “sublimits” for greenhouse gas emissions for certain sectors: electric power, transportation, commercial and industrial heating and cooling, residential heating and cooling, industrial processes, and natural gas distribution and service. To date, electric generation has been the low-hanging policy fruit; these sublimits reinforce an emerging shift towards seeking emission reductions from other sectors.
- Though less likely to garner headlines than other provisions, the act makes a momentous change to the mandate of the Department of Public Utilities (“DPU”) that may have broad effects. It establishes “reductions in greenhouse gas emissions” as a fundamental priority for the DPU along with safety, security, reliability, affordability, and equity. This change – along with similar, more specific, changes to the DPU’s authority in administering energy efficiency programs – will have wide-reaching impact because of the number of energy policies that are implemented through the DPU.
- Changes to the RPS program will accelerate the rate of increase for RPS requirements, raising the annual increase in the RPS to 3% in 2025 and maintaining that level of annual increase until 2030.
- The act also brings the RPS to municipal lighting plants, requiring them to establish a greenhouse gas emissions standard with a minimum of 50% of sales to end-users being non-carbon emitting energy by 2030, rising to 75% by 2040 and net zero by 2050.
- The act changes the property tax exemption for solar and wind facilities and creates a property tax exemption for fuel cell facilities.
- In a move likely to frustrate some independent power generators, the act allows electric and gas distribution companies to own and operate solar energy projects approved by municipalities and intended to benefit environmental justice communities, if they obtain DPU approval. The act caps the capacity of solar generation each such company can own, but the cap is quite high (10% of the total installed solar generation capacity in Massachusetts as of July 31, 2020 per company).
- The act makes several changes to net metering. It allows bill credits to be allocated across distribution companies and load zones to any distribution company customer in Massachusetts. And it exempts certain Class II and Class III net metering facilities with executed ISAs in 2021 or later from distribution company capacity caps if they serve onsite load and their credits are valued at the distribution company’s “avoided cost rate.” Precisely how that rate will be calculated is not clear.
- Once again making clear the promise the Commonwealth sees in offshore wind, the act expands the procurement of offshore wind energy under Section 83C of the Green Communities Act by 2,400 MW and reduces the time between procurements. It also allows DOER to require electric distribution companies solicit offshore wind transmission that may be developed independent of offshore wind generation.
- Among several provisions meant to promote environmental justice and equitable provision of the benefits associated with renewable energy deployment, the act puts requirements on certain solar incentive programs (to date DOER’s “SMART Program”), requiring that they provide equitable access to ratepayers, including low-income ratepayers, address solar energy access and affordability for low-income communities, include effective consumer protections, and ensure that information about such programs is accessible to non-English speaking communities. The act also establishes a fund to support the provision of solar energy to certain types of non-profit organizations serving low income communities.
- In a potentially procedurally fraught effort to improve or codify DOER’s SMART Program, the act requires DOER and the DPU to amend “any rules, regulations, and tariffs” to permit SMART facilities other than net metering facilities that achieve commercial operation on or after January 1, 2021 to (i) receive bill credits for generation that exceeds their usage that will be carried forward month to month, (ii) allocate those credits to any customers of the same distribution company, and (iii) direct the distribution company to purchase their credits at the rates provided for in the program without discount, fee, or penalty. DOER recently revised its SMART regulations, and tariffs are currently under review at the DPU. How this statutory change will interact with those ongoing processes remains to be seen.
- The act allows for gas companies to obtain DPU approval for pilot projects for the development of utility-scale renewable thermal energy.
And I promise, that’s not all of it. Altogether, it is an ambitious package that takes meaningful steps to ensure that Massachusetts achieves its top-line emission reduction targets.
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