Governor's focus on price puts him on different path than environmentalists
Gov. Charlie Baker said on Tuesday that Massachusetts and the rest of New England are standing at a crossroads on energy, but it appears he wants to go down a different path than most environmental activists and their backers in the Legislature.
Baker told the Legislature’s Committee on Telecommunications, Utilities, and Energy that he has two energy priorities: meeting the state’s emission reduction targets and reducing the price of electricity. He wants lawmakers to pass a law allowing the state’s electric utilities to run a competitive solicitation for 1,200 to 2,400 megawatts of power — most likely hydroelectricity from Canada, possibly with a component of onshore wind power.
The governor also favors maintaining existing subsidies for solar power development until the target of 1,600 megawatts of installed capacity is reached. The state is currently at 900 megawatts. After the target is reached, Baker said he would ratchet back the subsidies, which his administration estimates cost ratepayers about $200 million a year.
Environmental activists and their supporters in the Legislature also want to reach the state’s emission targets, but they are less concerned about price and focused more on moving to an energy system that relies on renewables that can be produced in Massachusetts or off its shores. They fear the governor’s push for big hydro purchases, and his backing for new natural gas pipeline capacity into the region, will undercut the still emerging renewable energy industry.
A panel of environmental advocates that included representatives from the Conservation Law Foundation and the Acadia Center said they favor mandating the purchase of offshore wind and larger purchases of other renewables. The foundation also opposes having electric ratepayers foot the bill for new natural gas pipeline capacity.
Sen. Marc Pacheco of Taunton said he had concerns that Baker’s push for big hydropower contracts with Canada would undermine efforts to create a home-grown renewable energy industry. He said he had recently visited Denmark to learn about its burgeoning offshore wind industry and came away convinced that Massachusetts could benefit by following a similar course. “We could be exporting energy to other New England states,” he said.
Baker responded that he’s not throwing any technology off his “jumbo platter” of energy options, although he didn’t mention offshore wind when he listed his platter options. The governor said 8,500 megawatts of power generation could be going offline in the region over the next several years. If state regulators, working with their counterparts in Connecticut and Rhode Island, were to approve utility purchases of 2,400 megawatts of hydropower, Baker said almost 6,100 megawatts of power would still be needed from other sources. “That still leaves a ton of room for all kinds of other things,” he said.
Pacheco questioned Baker’s preoccupation with price, saying head-to-head price comparisons between hydropower and offshore wind ignore the advantages of growing a local industry. “It’s not just in the price,” he said. “It’s in clean air and it’s also about creating jobs here.”
Matthew Beaton, Baker’s secretary of energy and environmental affairs, acknowledged price should not be the only consideration, but he indicated it is a major one. He said wind power in Denmark costs twice as much as power in New England, where prices are already among the highest in the United States.
Pacheco said Beaton’s numbers were off, indicating offshore wind could be competitive with power produced by gas-fired power plants.
Baker piped right up after Pacheco suggested offshore wind would be price competitive with existing technologies, urging lawmakers to give his administration the authority to test the senator’s claim by putting out a competitive solicitation for offshore wind power.
Rep. Patricia Haddad of Somerset, the speaker pro tempore in the House, said she favors a carveout for offshore wind, which would mean the state’s utilities, when they solicit power contracts, would be required to purchase a set amount from offshore wind producers. Haddad says her legislation would kickstart a local offshore wind industry and bring jobs to southeastern Massachusetts and her district, where the coal-fired Brayton Point power plant is in the process of closing.
Haddad went to great lengths to distinguish her offshore wind proposal from the failed Cape Wind project. Cape Wind landed attractive contracts from Massachusetts utilities for about two-thirds of its power output, but those contracts lapsed when the project was unable to obtain construction financing.
Haddad said her proposal would target wind projects much further offshore than Cape Wind was going to be located and would use more advanced and cost-effective technology. “My proposal and the Cape Wind project are completely different and not related,” she said. She then repeated herself to underscore her point.
Beaton, in an interview with reporters outside Gardner Auditorium, said he doubted offshore wind could be price competitive in an open procurement. He said the governor was willing to test the market for offshore wind, but probably would not commit to a special carveout for the energy technology.
The region’s existing power generators say Canadian hydropower producers are likely to sell electricity to New England at premium prices, but Baker said he believes prices could come in low because several Canadian provinces are interested in exporting power to the United States. He said competition for the region’s business could yield attractive prices.
Under existing law, Massachusetts is required to reduce emissions 25 percent from 1990 levels by 2020 and 80 percent by 2050. As of 2012, Baker said, the state had reduced emissions 15 percent from 1990 levels. “We are in danger of being out of compliance,” Baker said, suggesting the hydro contracts were desperately needed to help attain the state’s emissions goals.
The governor stressed that he is in favor of solar power, but he wants to ratchet back state subsidies for the technology once the current target of 1,600 megawatts is reached. Solar producers are currently paid 15 to 16 cents a kilowatt hour for electricity sold into the region’s power grid. Under Baker’s proposal, only residential solar installations would continue to receive that price, while government installations would see their price fall to 8 to 9 cents a kilowatt hour and the price received by large-scale solar installations would fall to 3 to 5 cents.
Baker entered the State House’s standing-room-only Gardner Auditorium on crutches due to a recurring injury to his Achilles. When lawmakers asked him what had happened, he said: “I’m old.”