Massachusetts Legislature Passes Energy Bill Broadening Support for Renewable Energy

In the Press · August 7, 2012

A recent decision from
Beacon Hill provided good news to developers of renewable energy projects and
those who utilize net metering credits produced through the power generated by
those projects.

The
Massachusetts House of Representatives and the Massachusetts Senate agreed to
provisions in a joint energy bill, SB 2395 (the Bill) that increased the
existing limits on the Commonwealth’s net metering capacity, and provided for
enhanced long-term energy contracting with Massachusetts investor owned
utilities (IOU).

Current Massachusetts
net metering regulations require IOUs to credit the accounts of their customers
whenever a customer’s eligible renewable energy facility generates more
electricity than is being consumed. Net metering allows customers to realize
the value of net metering as credits on their utility bill, or to allocate
those credits to as many other customers as they elect within the same load
zone and IOU jurisdiction.  

Until Sunday, July 28,
2012, each IOU was obligated to account for these credits in an amount up to a
total of 3% of its historic peak-power load – 1% for private projects and 2%
for governmental and municipal projects. Once the IOU reached its 3% threshold,
the IOU was no longer obligated to provide net metering credits to new
renewable energy facilities, except to the extent the IOU’s peak load increased
over time.

However, the passage
of SB 2395 increased this aggregate cap to 6% – 3% for private projects and 3%
for governmental and municipal projects – effectively tripling the private
project net metering capacity.This change comes at a critical time, as current
IOU website statistics show that the aggregate capacity of eligible private net
metering facilities is nearing the 1% limit.  

Had the bill not
passed, many renewable energy facilities coming online in Q3 and Q4 may have
been ineligible to receive net metering credits for their project, thereby
eliminating a popular incentive for both project developers and one that has
been a benefit to the end users of the power generated by those facilities.

The Bill also now
requires each IOU to competitively procure, by 2016, an additional 4%
– now totaling 7% – of its historic peak-power load needs from renewable
sources through long-term contracts with terms of 10 to 20 years.   
 

However, the Bill did not provide all good
news. An earlier provision of the Bill, which was drafted with the intent to
normalize property taxes in connection with solar and wind projects via a
statewide payment in lieu of taxes (PILOT), did not survive the final draft.
The result is the ongoing inconsistent treatment from municipality to
municipality about how to impose property taxes on energy facilities.
Nevertheless, the increase in net metering capacity and the enhanced long term
IOU contract requirements are a significant improvement to the already robust
Massachusetts renewable energy incentives. 

If you would like
additional information about the new regulations or available incentives for
solar PV projects, or want to learn more about renewable energy and energy
efficiency regulations,  please contact Craig M. Tateronis. You
can reach Craig at 617 456 8021 or ctateronis@princelobel.com