Massachusetts Dives Into Electricity Restructuring

[Lisa Marina Brooks <lbrooks@essential.org>]

  To our energy colleagues:
  
  Thursday, September 12, 1996, the Massachusettes Attorney
  General, Massachusetts Electric Company (the retail affiliate of
  NEES) and Conservation Law Foundation announced the outlines of a
  restructuring agreement covering the largest service territory in
  the state. The agreement provides for historic levels of funding
  for energy efficiency and renewable resources and, in a first for
  the country, commits NEES to clean up air emissions from existing
  power plants -- the first utility in the nation to commit to "old
  source review" of its existing plants.
  
  The "Consumers First Plan" provides for direct access to
  competitive markets for electricity for all customers on 1/1/98.
  There are no staged access provisions -- all residential,
  commercial and industrial customers would be provided access by
  1998. This provides the critical opportunity for cleaner power
  plants and clean renewable energy providers to sell directly to
  customers, thus opening up the potential for "green" markets for
  wind, solar, fuel cells, clean biomass and natural gas power
  within 18 months.
  
  The agreement also provides that operating subsidies for existing
  coal, oil, and nuclear plants are removed, thus forcing such
  plants to compete in the market.
  
  As for air emissions, the agreement provides a first in the
  country, common sense model for cleaning up older power plants
  throughout the United States by requiring old plants to meet new
  power plant standards. The elements of the agreement are as
  follows:
  
  *    The process calls for NOX and SO2 emissions to be reduced to
  "new source" standards when a power plant reaches forty years of
  age by the year 2010, whichever is earlier.
  
  *    The required emissions can be met by shutting down old
  units, installing pollution controls, converting fuels or by
  purchasing offsets of these emissions from other sources.  Net
  NOX emissions from these units would be reduced from 23,000 tons
  per year by stages to 10,000 tons in 2010. Net SO2 emissions
  would be reduced from 80,000 tons per year to 20,000 tons in
  2010.
  
  *    The final agreed upon reductions (all of the above would be
  done in stages) is contingent on cleaning up certain upwind units
  approximately those allowed today in Massachusetts. Moreover,
  emissions would be accelerated to stay ahead of clean  up in
  upwind states as they occur.
  
  It is CLF's expectation that these air emissions provisions can
  be used as a national model to encourage upwind, older plants to
  clean up emissions. The New England region, if this agreement is
  implemented widely, will have
  clean hands to argue for emissions reductions from upwind
  states, as the national debate over restructuring proceeds.
  
  As for energy efficiency and renewables, the agreement maintains
  financial support for existing programs at historic high levels.
  Support for efficiency and renewables programs would be
  maintained at 0.4 cents kilowatt hour per year for the next five
  years. This comes to about $65 million a year.
  
  For those keeping score on recent developments on funding levels
  for these programs in other states, the comparison (adjusted)
  looks something like this (please consider this as rough
  estimate, but fairly accurate):
  
                    MA         RI         CA
          
  __________________________________________________________
  Amount (mills):   4.0+       2.3        2.7 -- 3.0
                                          (DSM -- 1.4)
                                          (New Ren.--0.42)
                                           (Old Ren.--0.42)
                                           (R&D --  0.3)
  Through:         12/31/01    12/31/01   12/31/01
  
  Direct Acces     1/1/98      1/1/98     1/1/98
           
  _________________________________________________________
  
  CLF is extremely pleased with these continued funding levels
  because they would maintain programs essential to any affordable
  plan for the state to reduce greenhouse gas emissions to
  stabilize climate change. The mills charge would be used to not
  only fund efficiency programs but commercialize renewable
  technologies (in amounts to be determined by the DPU). The
  agreement, as of this writing, does not contain any other
  mechanism for renewables acquisition like the portfolio standard.
  
  This deal is in the form of a rate agreement subject to DPU and
  FERC approval; we expect it may be a model for future decisions
  from both forums.
  
  We expect to send hard copies of the plan to you in the coming
  days, but thought you would be interested in an early summary of
  the plan by email. Thank you again, and we would appreciate any
  comments. Our press release announcing the plan is also attached.
  
            Lewis Milford
            CLF Energy Project Director
  
            Joe Chaisson
            CLF Energy Project Technical Director
  
   _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  _  
  
  For more information on restructuring issues please contact Charlie 
  Higley at Public Citizen's Critical Mass Energy Project
  
  higley@citizen.org or (202) 546-4996
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