Massachusetts climate change executive order

Massachusetts Governor Charlie Baker signed an executive order last month setting a comprehensive approach to climate change.  Executive Order No. 569, Establishing An Integrated Climate Change Strategy for the Commonwealth, directs state agencies to take a portfolio of actions to reduce greenhouse gas emissions, protect against the impacts of climate change, and improve resilience.

The order opens with acknowledgements that climate change and associated extreme weather events present serious threats.  It also notes the state's Global Warming Solutions Act, and the greenhouse gas emissions limits mandated by that law -- a 25% reduction below 1990 levels, achieved by 2020.  Following a decision by the Massachusetts Supreme Judicial Court earlier this year, regulations under that law must establish "declining annual aggregate emissions" for greenhouse gases.

Turning to action items, Executive Order No. 569 requires the Secretary of Energy and Environmental Affairs to publish a "comprehensive energy plan" within 2 years, with an update every 5 years thereafter.

The executive order also requires the Department of Environmental Protection to issue regulations to ensure that Massachusetts meets the 2020 statewide emissions limit required by the Global Warming Solutions Act.   Pursuant to the executive order, these regulations must be finally promulgated by August 11, 2017.

Executive Order No. 569 also requires coordination between the state's Energy and Environmental Affairs and Public Safety offices, with respect to strengthening community resilience, preparing for the impacts of climate change, and preparing for and mitigating damage from extreme weather events.  Within 2 years, this coordination will result in a Climate Adaptation Plan presenting a statewide adaptation strategy.

Massachusetts solar legislation signed

Massachusetts Governor Charlie Baker has signed a bill passed by the state legislature to expand the Massachusetts solar industry and establish a long-term framework for sustainable solar development.

The bill, An Act Relative to Solar Energy, preserves and expands net metering.  Net metering -- a customer's right to offset its solar power production against its consumption of electricity from the grid -- has been an important incentive for solar projects in Massachusetts, leading to the development of over 1,000 megawatts of solar capacity currently installed in Massachusetts.  Previous law set caps on how much solar capacity each utility was required to let its customers net meter against their load.  But at least one utility has reached its cap, cutting off future projects' access to net metering in that territory, and the other utilities are close behind.

In response to interest in preserving net metering, the bill signed into law on April 11 increases the state's solar net metering caps, which limit how much net metered capacity may be installed in each utility's service territory.  It raises the cap on publicly owned projects from 5% of utilities’ peak load to 8%, and lifts the cap on private net metered projects from 4% of utilities’ peak load to 7%.   

At the same time, the bill changes the value of net metering credits for some new projects.  When a net metered customer's solar system produces more electricity than the customer uses, the customer receives credit for its excess production.  Historically, that credit was at the full retail rate -- meaning the customer is credited the same amount for a kilowatt-hour exported to the grid as the customer pays the utility to buy that kilowatt-hour from the grid.  The fact that net metered generation is credited at the full retail rate, as opposed to any lesser amount, has helped net metering drive solar project development.

But some utilities have expressed concerns that net metering imposes costs on other customers who don't have net metered distributed generation.  In an effort to balance cost containment against effective incentives for solar development, the Massachusetts legislation sets the new credit value for most solar projects (other than residential, small commercial, municipal and government-owned) at 60% of the full retail rate once the state hits its goal of 1,600 megawatts of solar capacity.

But to "facilitate continued solar growth within communities around the Commonwealth," the bill preserves retail rate credits for municipal and government-owned projects.  It also continues to exempt residential and small commercial projects from the net metering cap and any net metering credit reductions.

Looking forward, the bill also requires the Department of Energy Resources (DOER) to "develop a statewide solar incentive program to encourage the continued development of solar renewable energy generating sources by residential, commercial, governmental and industrial electricity customers."  The bill gives the Department guidance on the characteristics of that program, including that it must be one which: "promotes the orderly transition to a stable and self-sustaining solar market at a reasonable cost to ratepayers," considers underlying system costs, takes into account electricity revenues and incentives, relies on market-based mechanisms or price signals, minimizes costs and barriers, features a declining incentive framework, differentiates incentive levels, "ensures that the utility customer realizes the direct benefits of the solar incentive program," considers the value of distributed generation and encourages solar generation where it benefits the distribution system, shares program costs collectively among all ratepayers, and promotes investor confidence through long-term incentive revenue certainty and market stability.

With the bill signed into law, the Department of Energy Resources is expected to open a rulemaking proceeding and solicit public comment on the development of the new solar incentive program.

Massachusetts net metering expansion bills

As Massachusetts solar energy legislation seems stalled over debate on the value of solar renewable energy credits, 100 state legislators have written to the Massachusetts House of Representatives leadership calling for "a bill to raise net metering caps as expeditiously as possible."  Governor Baker, the state House and Senate have each agreed to expand net metering programs, but legislation has yet to be fully enacted due to a lack of agreement over the separate SREC issue.

Solar panels on a rooftop in Massachusetts.

Massachusetts solar energy policy is at an inflection point, as the state's two most significant solar photovoltaic offerings -- net metering and the Department of Energy Resources SREC II program -- reach prescribed limits.

Current law caps public sector net metering at 5% of a distribution company's historical peak load, and private sector net metering at 4%.  Last year, Governor Charlie Baker and legislators agreed to increase each of these caps by another 2% of load. The Baker administration described An Act relative to a long-term, sustainable solar industry as maintaining:

strong support for solar generation in the Commonwealth by raising the private and public net metering caps two percent each, to six and seven percent, respectively. The enhancement of cap space represents a 50% increase for public entities, and a 40% increase for private entities, in the allowable amount of solar energy available for net metering credits. This increase will provide immediate support for projects being developed in service territories where the caps have already been reached, and provides the Department of Public Utilities with the authority to raise the caps further, as needed in the future.

In the last legislative session, the Massachusetts House and Senate each passed a similar bill expanding net metering.  But because these bills differed on the reimbursement rate for solar renewable energy credits (SRECs), a conference committee must now try to find agreement between the versions if the concept is to advance. 

In an apparent attempt to prompt action from the conference committee, 100 state legislators signed a March 14, 2016, letter calling for a floor vote on a bill at the earliest opportunity.  The legislators described net metering credits as "compensation for the value provided by solar generation exported to the grid."  They articulated a pro-consumer net metering policy:

In our view, a strong net metering policy, at a minimum, calls for maintaining retail net metering credit value for preferred classes of projects, such as (1) community shared solar, (2) projects that serve low income housing and low-income ratepayers and (3) municipalities until an official, publicly scrutinized analysis of costs and benefits has been completed. In addition, we ask the Conference Committee to ensure grandfathering of existing systems. We also are in favor of the inclusion of new or expanded programs to achieve solar equity for low-income residents.

The legislators noted increased urgency given the filling up of the SREC II program.

The bills -- H.3854 and S.2058 -- are now before the Conference Committee.