Massachusetts Electric (New England Electric) Restructuring

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

  To: Energy Advocates
  From: Alan Nogee, Union of Concerned Scientists
  Re: Massachusetts Electric (New England Electric) Restructuring
  Settlement - Renewables and Nuclear Provisions
  
  The final October 1 Massachusetts Electric settlement included
  specific renewable energy and nuclear provisions negotiated by
  the Union of Concerned Scientists.
  
  RENEWABLES
  
  * Explicit renewables funding levels are defined for four years:
          1998    0.25 mills/kWh
          1999    0.55 mills/kWh
          2000    0.85 mills/kWh
          2001    1.25 mills/kWh
  
  Renewables funding comes out of a 4 mill system benefit charge
  for DSM and renewables combined which had previously been
  negotiated and agreed to by the Conservation Law Foundation and
  New England Energy Efficiency Council.
  
       * Eligible resources/technologies include solar, wind,
  ocean, landfill gas, low emission advanced biomass power
  conversion technologies like gasification, and fuel cells.
  
       * After 2001, funding will be determined by the Department
  of Public Utilities.  Funding after this date is recommended to
  be "...based on a goal of supplying at least four percent of
  Massachusetts electricity kilowatthour sales from such new, clean
  technologies by the end of 2007."
  
       * Funds will be allocated based on input from a
  collaborative process, making use of competitive bidding, and
  will attempt to promote as diverse a group of clean technologies
  as is practical.
  
       * Mass. Electric "will perform pilot projects in 1997... to
  assess the value of distributed clean generation, conservation
  and load management in reducing or avoiding distribution system
  costs. Operational procedures to invest in clean distributed
  generation and geographically-targeted DSM that lower
  distribution costs should be implemented as soon as is
  practical."
  
       * Renewables and small scale cogeneration (below 30 kW) will
  continue to remain eligible for net metering, with surplus power
  buyback at the retail rate for net negative electricity
  production.
  
       * The parties "agree to work cooperatively...to substitute
  for the existing need and least cost requirements in the current
  [siting]statute a mechanism... which gives a preference for clean
  energy technologies, including demand-side management and clean
  renewables, in the Commonwealth's energy supply."
  
  Should the system benefit charge be cut off after four years, as
  in the California legislation, the average funding over the four
  years would equal 0.73 mills per kWh, approximately the same
  level as in California (0.73-0.84 mills). In the Massachusetts
  Electric agreement, all the funding goes for new projects,
  whereas 40-60% of the renewables funding in California is to
  support existing renewables projects. (California also has
  approximately 0.3-0.4 mills/kWh for R&D funding, some of which is
  likely to go to renewables).  NEES' existing renewables
  commitments will be funded out of their 2.8 cent per kWh stranded
  cost charge.
  
  The renewables funding ramp-up and the goal of adding new
  renewables equal to at least 4% of total sales over ten years
  were  consistent with UCS' analysis and testimony to the DPU, as
  a reasonable New England contribution to a national sustained
  orderly development plan. The Vermont Dept. of Public Service has
  endorsed the +4% goal for that state's renewables portfolio
  standard, although the Public Service Board's decision deferred
  the decision on portfolio standard level to a subsequent
  proceeding. The annual rate of increase (0.4% per year) would be
  double the rate of increase in the portfolio standard section of
  the federal Schaeffer bill from 2000-2010.  There are also
  continuing coalition discussions about trying to establish the
  Massachusetts renewables goal as a portfolio standard in the
  legislature.
  
  
  NUCLEAR ISSUES:
  
       * Prior to UCS' involvement in the settlement, the primary
  parties had agreed that if NEES is unable to sell, lease, or
  otherwise dispose of its minority share of nuclear plants, the
  shareholders will absorb 20% of going-forward above-market
  operating costs (including capital additions).  The settlement is
  explicit that this shareholder contribution is appropriate only
  for NEES as a minority owner of a number of nuclear plants.  It
  should not be seen as an appropriate precedent for a majority
  owner/operator.
  
       * If it cannot dispose of its share, NEES agreed to UCS'
  proposal that it would develop, after consulting with
  signatories, a nuclear safety incentive with rewards or penalties
  of up to $1 million per year based on nuclear safety performance.
  
       * NEES agreed to UCS' proposal to change the definition of
  decommissioning costs recovered in the stranded cost charge to
  exclude "any net incremental decommissioning costs caused by
  operations after the Retail Access Date."  While such costs are
  not expected to be a large component of total decommissioning
  costs, if they are includable in decom costs, there is an
  operating subsidy and an incentive for plant owners to let low
  level waste pile up and be treated as an eventual decommissioning
  cost instead of disposed of in operating costs.
  
  
  For additional information, contact: Alan Nogee, Senior Energy
  Analyst, Union of Concerned Scientists, 2 Brattle Square,
  Cambridge, MA 02238.  (617) 547-5552. Fax: (617) 864-9405. 
  Email: <anogee@ucsusa.org>
  
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