Bill S.2200

FILED ON: 3/26/2012

SENATE . . . . . . . . . . . . . . No. 2200

The Commonwealth of Massachusetts

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In the Year Two Thousand Twelve

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An Act relative to competitively priced electricity in the Commonwealth.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 35FF of chapter 10 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting, after subsection (c), the following subsection:-

(c½) All amounts paid by retail suppliers under subsections (h) and (h½) of section 11F of chapter 25A shall be deposited into the fund. If a shortfall is identified under section 11F¼ of said chapter 25A, resulting in the procurement, contracting, purchase and sale of energy, renewable energy certificates or transmission scheduling rights under said section, then all amounts paid into the fund under said subsections (h) and (h½) of said section 11F of said chapter 25A shall first be obligated to pay for any contracts procured under said section 11F¼ of said chapter 25A. The center shall immediately, and thereafter annually, transfer into a segregated account the amounts to be used to fulfill the requirements of said section 11F¼ of said chapter 25A. The amounts transferred under said section 11F of said chapter 25A and the annual revenues from sales of energy, renewable energy certificates and transmission scheduling rights shall be credited to the segregated account to reduce the annual assessment on retail electricity suppliers. Any reductions in the assessments charged to retail electricity suppliers under this section shall be credited according to the same basis as the annual assessment was originally calculated for that year.

SECTION 2. Subsection (a) of section 3 of chapter 23J, as so appearing, is hereby amended by adding the following clause:- (32) to procure, contract for and sell energy, renewable energy certificates and transmission scheduling rights under section 11F¼ of chapter 25A.

SECTION 3. Section 18 of chapter 25 of the General Laws, as so appearing, is hereby amended by striking out the fourth paragraph.

SECTION 4. Section 19 of said chapter 25, as so appearing, is hereby amended by adding the following subsection:-

(d) There shall be a voluntary accelerated rebate pilot program which shall be made available to the 5 largest electric users and 5 largest gas users in each utility service territory. Multiple locations of the same customer shall not be aggregated for purposes of meeting this threshold. Eligible customers electing to participate in the accelerated pilot program shall notify the appropriate program administrator on or before January 31 of each calendar year during the pilot program. Customers electing to participate shall be eligible for up to a 100 per cent rebate for qualified energy efficiency measures as determined by the department. Total rebate levels for participating customers in any year of the pilot program shall not exceed 90 per cent of the amount the customer was charged for energy efficiency programs for calendar year 2012. A participating customer shall not aggregate a rebate from any year in which the customer does not participate in the pilot. Qualified energy efficiency measures shall include cost-effective energy efficiency program measures approved by the department under section 21; provided, however, that up to 15 per cent of any accelerated rebate may be used for other improvements that support energy efficiency improvements made under a program approved by the department or emission reductions, including, but not limited to infrastructure improvements, metering, circuit level technology and software. Customers opting to receive an accelerated rebate shall be ineligible for other energy efficiency program rebates under said section 21 during the period in which they participate in the pilot program. All qualified installations shall be substantially completed by the end of the program, and shall be subject to verification and review by the department.

SECTION 5. Subsection (d) of said section 19 of said chapter 25 of the General Laws is hereby repealed.

SECTION 6. Paragraph 1 of subsection (b) of section 21 of said chapter 25, as appearing in the 2010 Official Edition, is hereby amended by adding the following sentence:- No portion of monies expended under this section shall pay for compliance with federal or state building or energy codes applicable to participants.

SECTION 7. Said section 21 of said chapter 25, as so appearing, is hereby further amended by striking out, in lines 114 and 115 and line 118, the words “Massachusetts Technology Park Corporation” and inserting in place thereof the following words:- Massachusetts Clean Energy Technology Center.

SECTION 8. Section 22 of said chapter 25, as so appearing, is hereby amended by striking out, in line 2, the figure “11” and inserting in place thereof the following figure:- 15.

SECTION 9. Said section 22 of said chapter 25, as so appearing, is hereby amended by striking out, in line 9, the words “and (11) the department of energy resources” and inserting in place thereof the following words:- (11) the Massachusetts Non-profit Network, (12) a city or town in the commonwealth, (13) real estate, (14) a business employing less than 10 persons located in the commonwealth that performs energy efficiency services and (15) the department of energy resources.

SECTION 10. Section 6 of chapter 25A of the General Laws, as so appearing, is hereby amended by striking out, in line 37, the word “small”.

SECTION 11. Section 11F of said chapter 25A, as so appearing, is hereby amended by inserting after subsection (h) the following subsection:-

(h½) In the case of a shortfall identified under section 11F¼, retail electricity suppliers shall pay an assessment, as determined by the department, based upon the kilowatt-hours sales of each retail electricity supplier to end-use customers in the commonwealth. The assessment shall be designed to recover from retail electricity suppliers annualized contract costs incurred under such contracts, including costs to administer the procurement and marketing of the energy, renewable energy certificates, transmission scheduling rights and any other costs incurred by the commonwealth under section 11F¼, offset by annual revenues from sales of energy, renewable energy certificates and transmission scheduling rights that have been transferred under subsection (c½) of section 35FF of chapter 10.

SECTION 12. Said chapter 25A is hereby further amended by inserting after section 11F the following section:-

Section 11F¼. In the section the following words shall, unless the context clearly requires otherwise, have the following meanings:-

“CEC”, Massachusetts clean energy technology center, established under chapter 23J.

“REC”, renewable energy certificates.

“RFP”, request for proposals.

“RPS”, renewable energy portfolio standard.

The department and the attorney general shall jointly select an independent third-party, using a competitive procurement process based on criteria to be agreed upon in advance by the department and the attorney general, to prepare annually a 10-year forecast of the annual surplus or shortfall of Class I RECs available to meet Massachusetts’ renewable portfolio standards for Class I resources. The costs of completing the annual 10-year forecast shall be paid by the CEC using monies available in the Massachusetts Alternative and Clean Energy Investment Trust Fund established under section 35FF of chapter 10. The 10-year REC forecast shall be published on the department’s website and copies of the 10-year REC forecast shall be delivered to the secretary of energy and environmental affairs, the attorney general and the house and senate chairs of the joint committee on telecommunications, utilities and energy.

If the independent third-party’s 10-year forecast projects a shortfall in the supply of renewable energy needed to meet Class I of the RPS under section 11F demand of at least 1,200 gigawatt hours per year, within the first 5 years of the study period that is sustained for not less than 5 consecutive years, the CEC shall, within 6 months of the publication of the forecast, solicit competitive proposals from developers of new Class I renewable energy generating sources and electric transmission developers that would enable delivery of energy and RECs produced by qualified Class I renewable resources to the ISO-NE control area. The CEC shall administer a competitive solicitation process in the form of an RFP for renewable energy generation and transmission that would result in the delivery of Class I RPS eligible resources to load. The RFP shall seek a quantity of RECs sufficient to meet the 5-year average shortfall, calculated using the first year that the shortfall exceeds 1,200 gigawatt hours and including the subsequent 4 years. Provided competitive proposals have been received, the CEC shall enter into long-term contracts with renewable energy developer or developers for energy and RECs sufficient to meet the average 5-year shortfall and if necessary long-term contracts for transmission scheduling rights sufficient to deliver the renewable generation required; provided, that such contracts shall not be effective unless approved by the department of public utilities. A project applicant in the RFP process may identify non-Class I resources that could occupy the excess capacity of the transmission line that is available when not being used by the renewable generation. The CEC shall administer the RFP process, including a timetable and method for solicitation and execution of resulting contracts, under the procedures applicable to the procurement of statewide contracts under section 22 of chapter 7. The CEC shall consult with the department in developing the request for proposals called for in this paragraph.

For purposes of this section, a long-term contract with a Class I generating resource shall be a contract with a term of up to 20 years, and a long-term contract with a transmission developer shall be a contract with a term of up to 30 years.

The CEC shall adopt regulations consistent with this section. The regulations shall: (a) allow renewable energy developers and transmission developers to submit proposals for long-term contracts conforming to the contracting terms specified in the second paragraph of this section; (b) require that the renewable energy generating source to be used by a developer under the proposal meet the following criteria: (1) have a commercial operation date, as verified by the department, not earlier than January 1 of the same year as the effective date of the long-term contract; (2) be qualified by the department as eligible to participate in the RPS program, under section 11F and to sell RECs under the program; and (3) be determined to be the least-cost bid for RECs and energy when including the cost of any transmission required to be procured under this section to enable delivery of energy and RECs produced by qualified Class I renewable resources to the ISO-NE control area; and (c) require that electric transmission scheduling rights procured under the competitive solicitation meet the following criteria: (1) have a commercial operation date, as verified by the department, no earlier than January 1 of the same year as the effective date of the long-term contract; (2) for long-term contracts awarded under this section, provide sufficient transmission scheduling rights to enable delivery of energy and RECs produced by qualified Class I renewable resources to the ISO-NE control area ; (3) increase the maximum transfer capability of transmission in the ISO-NE control area to directly or indirectly enhance the availability of energy to load zones in the commonwealth; and (4) be determined by the department of public utilities to be cost effective to electric ratepayers in the commonwealth over the term of the contract.

The contracts entered into by the CEC under this section shall be reviewed by the department of public utilities. If over the life of the contract the net present value of the contract payments determined under subclause (3) of clause (b) is lower than the net present value of an equivalent quantity of energy and RECs delivered at a price equal to the sum of the forecast energy price and the alternative compliance payment rates established by the department under subsection (h) of section 11F, then the contracts entered into by the CEC under this section shall be approved by the department of public utilities, with no additional review. If over the life of the contract the net present value of the contract payments determined under subclause (3) of clause (b) is higher than or equal to the net present value of an equivalent quantity of energy and RECs delivered at a price equal to the sum of the forecast energy price and the alternative compliance payment rates established by the department under subsection (h) of section 11F, then the department of public utilities shall review the contracts and determine whether to approve them. In the case of any such contract, the CEC shall include documentation of its cost-effectiveness to ratepayers, specifying the parameters used to make this calculation, including, but not limited to, the forecast energy price and the discount rate. As part of its approval process, the department of public utilities shall consider the attorney general’s recommendations, which shall be submitted to the department of public utilities within 45 days following the filing of such contracts with the department of public utilities. The department of public utilities shall take into consideration both the potential costs and benefits of such contracts and shall approve a contract only upon a finding that it is cost effective to ratepayers. Notwithstanding this paragraph, however, if the department of public utilities determines that the solicitation process was not competitive, then it shall not approve the contracts.

The energy purchased by the state under long-term contract shall be sold into the wholesale spot market. The RECs and unused transmission scheduling rights purchased under long-term contract shall be sold through a competitive bid process. The proceeds of these transactions shall be deposited into the segregated fund under subsection (c½) of section 35FF of chapter 10.

If the RPS requirements of section 11F should ever terminate, contracts already executed shall remain in full force and effect.

SECTION 13. Section 2B of chapter 59 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting after the words “benefit of”, in line 2, the following words:- a governmental entity, including.

SECTION 14. Said section 2B of said chapter 59, as so appearing, is hereby further amended by inserting after the word “public”, in line 37, the following words:- , to leases for renewable generation facilities, defined as eligible under subsection (c) of section 11F of chapter 25A, in which not less than 50 per cent of the energy output is assigned to either the municipality in which the facility is located or to the governmental entity that owns the land on which the facility is located,.

SECTION 15. Section 5 of said chapter 59, as so appearing, is hereby amended by striking out clause Forty-fifth and inserting in place thereof the following clause:-

Forty-fifth, Any solar or wind powered system that is capable of producing not more than 125 per cent of the annual energy needs of the property upon which it is located and is behind the meter serving the energy needs of that property. All other solar and wind powered systems shall also be exempt provided that the owner has made to the city or town where the system is located a payment in lieu of taxes, equal to 5 per cent of the system’s gross electricity sales, including receipt of net metering credits as defined in section 138 of chapter 164, in the preceding calendar year. For years 1 and 2, the payments shall be annualized based on gross estimated sales derived from a formula to be determined by the department of revenue, in consultation with the department of energy resources. An exemption under this clause shall be allowed only for a period of 20 years from the date of operation of such system. This clause shall not apply to projects developed under section 1A of chapter 164.

SECTION 16. Subsection (b) of section 38H of said chapter 59, as so appearing, is hereby amended by inserting after the first sentence the following sentence:- For purposes of this section, a generation facility shall not include a facility powered by sun or wind to generate electricity.

SECTION 17. Section 1F of chapter 164 of the General Laws, as so appearing, is hereby amended by adding the following paragraph:-

(10) Notwithstanding section 94 or any other general or special law to the contrary, whenever the department makes a determination upon an application for a general increase in total distribution costs paid by ratepayers under 220 CMR 5.00 et seq. which results in an increase of 10 per cent or greater above the total distribution costs paid by those ratepayers at the time the application was filed, the department shall allow for not more than a 7 ½ per cent increase in rates for the first rate year in which the approved rates are to go into effect, and not more than a 7 ½ per cent increase in any subsequent year necessary to fulfill the approved rate. When a non-residential ratepayer is subject to an increase in total distribution costs that is 15 per cent or more than that ratepayer was paying prior to a department approved rate increase that caused such increase, the ratepayer may file a petition within 20 days after the department approves the rate increase for a phase-in of the ratepayer’s distribution cost increase over a period of years. The department shall order the phase-in upon a showing of the increased distribution costs of 15 per cent or more, but the ordered phase-in shall be for not less than 2 rate years and for not more than 50 per cent of the increase in the first rate year of the phase in period. Such petition shall be acted upon by the department within 60 days of its filing or prior to the rate becoming effective, whichever occurs first. Failure to act shall be considered approval by the department of the petition for not more than 50 per cent of the increase in year 1 and not more than 50 per cent in year 2.

SECTION 18. Section 94 of said chapter 164, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Gas and electric companies shall file with the department schedules, not less frequently than every 3 years, under a filing schedule as prescribed by the department and in such form as the department shall prescribe, showing all rates, prices and charges to be charged or collected within the commonwealth for the sale and distribution of gas or electricity, together with all forms of contracts to be used in connection with such schedules; provided, however, that the requirement to file a schedule with the department not less frequently than every 3 years shall not apply to a company or corporation as defined in section 1 of chapter 165. Rates, prices and charges in such a schedule may be changed by any such company by filing a schedule setting forth the changed rates, prices and charges; provided, however, that until the effective date of any such change no different rate, price or charge shall be charged, received or collected by the company filing such a schedule from those specified in the schedule then in effect; provided, further, that a company may:

(i) continue to charge, receive and collect rates, prices and charges under a contract lawfully entered into before the schedule takes effect or until the department otherwise orders, after notice to the company, a public hearing and determination that the public interest so requires; and

(ii) sell and distribute gas or electricity under a special contract hereafter made at rates or prices differing from those contained in a schedule in effect; provided, further, that a copy of the contract, in each instance, is filed with the department, except that a contract of a company whose sole business in the commonwealth is the supply of electricity in bulk need not file, except as may be required by the department.

Whenever the department receives notice of any changes proposed to be made in any schedule filed under this chapter which represent a general increase in rates, prices and charges for gas or electric service, it shall notify the attorney general immediately and shall hold a public hearing and make an investigation as to the propriety of such proposed changes after first causing notice of the time, place and the subject matter of such hearing to be published at least 21 days before such hearing in such local newspapers as the department may select. The department may apportion electric and gas company rate case expenses between shareholders and ratepayers. Unless the department otherwise authorizes, the rates, prices and charges under the schedule of a gas or electric company shall not become effective until the first day of the month next after the expiration of 14 days from the filing of the petition; provided, that the department shall not authorize rates filed under a proposed settlement agreement more than once in a 6-year period Unless the department otherwise authorizes, the rates, prices and charges set forth in the schedule of a corporation or company, as defined in section 1 of chapter 165, shall not become effective until the first day of the month next after the expiration of 14 days from the filing of the petition. Such rates, prices and charges shall apply to the consumption shown by meter readings made after the effective date of such rates, prices and charges, unless the department otherwise orders. So much of said schedules shall be printed in such form and distributed and published in such manner as the department may require.

SECTION 19. Section 94G½ of said chapter 164 is hereby repealed.

SECTION 20. Said chapter 164, as appearing in the 2010 Official Edition, is hereby amended by striking out section 96 and inserting in place thereof the following section:-

Section 96. (a) For purposes of this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

“Control”, the possession of the power, through direct or indirect ownership of a majority of the voting securities of a gas or electric company or a holding company, to direct or cause the direction of the management and policies of a gas or electric company or a holding company or the ability to effect a change in the composition of its board of directors or otherwise; provided, however, that control shall not be considered to arise solely from a revocable proxy or consent given to a person in response to a public proxy or consent solicitation made under the applicable rules and regulations of the Securities Exchange Act of 1934 unless a participant in said solicitation has announced an intention to effect a merger or consolidation with, reorganization or other business combination or extraordinary transaction involving the gas or electric company or the holding company.

“Foreign electric company”, an electric company with a domicile, principal place of business, headquarters or place of incorporation outside of the commonwealth.

“Foreign gas company”, a gas company with a domicile, principal place of business, headquarters or place of incorporation outside of the commonwealth.

“Holding company”, any corporation, association, partnership, trust or similar organization, or person which, regardless of the locus of the domicile, principal place of business, headquarters, or place of incorporation of such entity, either alone or in conjunction and under an arrangement or understanding with 1 or more other corporations, associations, partnerships, trusts or similar organizations, or persons, directly or indirectly, controls, or seeks to acquire control over, a gas or electric company.

(b) Notwithstanding this chapter or any other general or special law to the contrary, companies, except steam distribution companies, subject to this chapter, or holding companies may consolidate or merge with one another or may sell and convey their properties to another of such companies or to a wholesale generation company. Such companies, holding companies or wholesale generation companies may purchase such properties if: (i) the purchase, sale, consolidation or merger, and the terms thereof, have been approved, at meetings called for the purpose of approving such sale consolidation or merger, by a vote of the holders of at least two-thirds of each class of stock outstanding and entitled to vote on the question of each of the contracting companies; and (ii) that the department, after notice and a public hearing, has determined that such purchase and sale or consolidation or merger, and the terms thereof, are consistent with the public interest. In determining whether a purchase, sale consolidation or merger is consistent with the public interest, the department shall, at a minimum, consider: potential rate changes, if any; the long term strategies that will assure a reliable, cost effective energy delivery system; any anticipated interruptions in service; or other factors which may negatively impact customer service. The purchase or sale of properties by, or the consolidation or merger of, wholesale generation companies shall not require departmental approval except as otherwise provided in this subsection.

(c) Notwithstanding this chapter or any other general or special law to the contrary, gas, electric and holding companies, subject to this chapter, shall not enter into any transaction or otherwise take any action which would result in a change of control over any gas, electric or holding company, or foreign gas or electric company, unless: (i) the transaction or action have been approved, at meetings called for the purpose of approving such transaction or action, by a vote of the holders of at least two-thirds of each class of stock outstanding and entitled to vote on the question of each of the contracting companies; and (ii) the department, after notice and a public hearing, has determined that such transaction or action, and the terms thereof, are consistent with the public interest. In determining whether a transaction or action is consistent with the public interest, the department shall, at a minimum, consider: potential rate changes, if any; the long term strategies that will assure a reliable, cost effective energy delivery system; any anticipated interruptions in service; or other factors which may negatively impact customer service.

SECTION 21. The definition of “Net metering facility of a municipality or other governmental entity” in section 138 of said chapter 164, as so appearing, is hereby amended by adding the following words:- ; provided, however, that renewable energy facilities of a cooperative corporation organized under section 136 with only municipalities and other governmental entities as members may qualify as a net metering facility of a municipality or other governmental entity.

SECTION 22. Subsection (e) of section 139 of said chapter 164, as so appearing, is hereby amended by adding the following sentence:- For the purposes of net metering, a cooperative corporation organized under section 136 that is comprised solely of municipalities or other governmental entities shall not be considered an electric company, generation company, aggregator, supplier, energy marketer or energy broker, within the meaning of those terms as defined in sections 1 and 1F.

SECTION 23. Subsection (f) of said section 139 of said chapter 164, as so appearing, is hereby amended by striking out, in line 68, the words “1 per cent” and inserting in place thereof the following words:- 3 per cent.

SECTION 24. Said subsection (f) of said section 139 of said chapter 164, as so appearing, is hereby further amended by striking out, in line 70, the words “2 per cent” and inserting in place thereof the following words:- 3 per cent.

SECTION 25. Said subsection (f) of said section 139 of said chapter 164, as so appearing, is hereby further amended by inserting after the word “megawatts”, in line 73, the following words:- ; provided, that a cooperative corporation organized under section 136 that is comprised solely of municipalities or other governmental entities may assign generating capacity to municipalities or other governmental entities with the approval of the department.

SECTION 26. Subsection (g) of said section 139 of said chapter 164, as so appearing, is hereby amended by adding the following sentence:- The department shall adopt rules and regulations regarding the assurance of net metering eligibility.

SECTION 27. Said section 139 of said chapter 164, as so appearing, is hereby amended by adding the following subsection:-

(h) A Class I net metering facility shall be exempt from the aggregate net metering capacity of facilities that are not net metering facilities of a municipality or other governmental entity under subsection (f), and may net meter if it is generating renewable energy and:

(1) the nameplate capacity of the facility is equal to or less than 10 kilowatts on a single-phase circuit, or 25 kilowatts on a 3-phase circuit; or

(2) the department determines that the facility’s average kilowatt-hour generation will not exceed 100 per cent of the customer’s average kilowatt-hour usage over the course of a calendar year. The department’s determination shall be based on usage data from the previous calendar year and shall be made before the facility begins to generate electricity. If such data is not available, the department may use a forecast of the customer’s average usage over the course of a calendar year.

SECTION 28. Section 83 of chapter 169 of the acts of 2008 is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Beginning on July 1, 2009 and continuing until December 31, 2012, each distribution company, as defined in section 1 of chapter 164 of the General Laws, shall be required twice to solicit proposals from renewable energy developers and, provided reasonable proposals have been received, enter into cost-effective long-term contracts to facilitate the financing of renewable energy generation. The timetable and method for solicitation and execution of such contracts shall be proposed by the distribution company in consultation with the department of energy resources and shall be subject to review and approval by the department of public utilities. This long-term contracting obligation shall be separate and distinct from the electric distribution companies’ obligation to meet applicable annual renewable portfolio standard, hereinafter referred to as RPS, requirements, under section 11F of chapter 25A of the General Laws.

SECTION 29. Said chapter 169 is hereby further amended by inserting after section 83 the following section:-

Section 83A. Beginning on January 1, 2013 and continuing until December 31, 2016, each distribution company, as defined in section 1 of chapter 164 of the General Laws, shall be required twice in that time period to solicit additional proposals from renewable energy developers and, provided reasonable proposals have been received, enter into additional cost-effective long-term contracts to facilitate the financing of renewable energy generation. The timetable and method for solicitation and execution of such contracts shall be proposed by the distribution company in consultation with the department of energy resources and shall be subject to review and approval by the department of public utilities. This long-term contracting obligation shall be separate and distinct from the electric distribution companies’ obligation to meet applicable annual renewable portfolio standard, hereinafter referred to as RPS, requirements, under section 11F of chapter 25A of the General Laws.

For purposes of this section, a long term contract shall be a contract with a term of 15 to 20 years. In developing proposed long term contracts, the distribution company shall consider multiple contracting methods, including long-term contracts for renewable energy certificates, hereinafter referred to as RECs, for energy, and for a combination of both RECs and energy. Beginning January 1, 2013, the electric company shall select a reasonable method of soliciting proposals from renewable energy developers using a competitive bidding process only. Electric companies may use timetables and methods for the solicitation of competitively bid long-term contracts approved by the department of public utilities prior to January 1, 2013. The distribution company may decline to consider contract proposals having terms and conditions that it determines would require the contract obligation to place an unreasonable burden on the distribution company’s balance sheet. The distribution company shall consult with the department of energy resources regarding its choice of contracting methods and solicitation methods. All proposed contracts shall be subject to the review and approval of the department of public utilities.

The department of public utilities and the department of energy resources each shall adopt regulations consistent with this section. The regulations shall: (a) allow renewable energy developers to submit proposals for long-term contracts conforming to the contracting methods specified in the second paragraph; (b) require that contracts executed by the distribution company under such proposals are filed with, and approved by, the department of public utilities before they become effective; (c) provide for an annual remuneration for the contracting distribution company equal to the actual cost to the company for accepting the financial obligation of the long-term contract, but in no case shall such remuneration exceed 1 per cent of the annual payments under the contract, such provision to be acted upon by the department of public utilities at the time of contract approval; and (d) require that the renewable energy generating source to be used by a developer under the proposal meet the following criteria: (1) have a commercial operation date, as verified by the department of energy resources, on or after January 1, 2008; (2) be qualified by the department of energy resources as eligible to participate in the RPS program, under said section 11F of said chapter 25A, and to sell RECs under the program; and (3) be determined by the department of public utilities to: (i) provide enhanced electricity reliability within the commonwealth; (ii) contribute to moderating system peak load requirements; (iii) be cost effective to Massachusetts electric ratepayers over the term of the contract; and (iv) where feasible, create additional employment and economic development in the commonwealth. As part of its approval process, the department of public utilities shall consider the attorney general’s recommendations, which shall be submitted to the department of public utilities within 45 days following the filing of such contracts with the department of public utilities. The department of public utilities shall take into consideration both the potential costs and benefits of such contracts and shall approve a contract only upon a finding that it is a cost effective mechanism for procuring low cost renewable energy on a long-term basis taking into account the factors outlined in this section.

Distribution companies shall not be obligated to enter into long-term contracts under this section that would, in the aggregate, exceed 4 per cent of the total energy demand from all distribution customers in the service territory of the distribution company. Ten per cent of the aggregate level of long term contracts shall be reserved for newly developed, small, emerging or diverse renewable energy distributed generation facilities that are located within each distribution company’s service territory. Distributed generation projects shall have a nameplate capacity no larger than 6 megawatts, but shall not qualify as a class I, II or III net metering facility, as defined in section 138 of said chapter 164. unless the project is located within the service territory of a company where qualifying net metering facility development has been maximized under subsection (f) of section 139 of said chapter 164; provided, that long-term contracts for distributed generation technology shall not be awarded to any technology eligible for solar renewable energy credits at the time of solicitation. The department shall not approve contracts for distributed generation if the energy price proposed in the contract exceeds the sum of the distribution company’s residential (i) default service kilowatt-hour charge in the ISO-NE load zone where the customer is located; (ii) distribution kilowatt-hour charge; (iii) transmission kilowatt-hour charge; and (iv) transition kilowatt-hour charge at the time of solicitation. As long as the electric distribution company has entered into long-term contracts in compliance with this section, it shall not be required by regulation or order to enter into contracts with terms of more than 3 years in meeting its applicable annual RPS requirements under said section 11F of said chapter 25A, unless the department of public utilities finds that such contracts are in the best interest of customers; provided, however, that the electric distribution company may execute such contracts voluntarily, subject to the department of public utilities’ approval.

An electric distribution company may elect to use any energy purchased under such contracts for resale to its customers, and may elect to retain RECs for the purpose of meeting the applicable annual RPS requirements under said section 11F of said chapter 25A. If the energy and RECs are not so used, such companies shall sell such purchased energy into the wholesale spot market and shall sell such purchased RECs through a competitive bid process. Notwithstanding the previous sentence, the department of energy resources shall conduct periodic reviews to determine the impact on the energy and REC markets of the disposition of energy and RECs under this section and may issue reports recommending legislative changes if it determines that actions are being taken that will adversely affect the energy and REC markets.

If the distribution company sells the purchased energy into the wholesale spot market and auctions the RECs as described in the fifth paragraph, the distribution company shall net the cost of payments made to projects under the long-term contracts against the proceeds obtained from the sale of energy and RECs, and the difference shall be credited or charged to all distribution customers through a uniform fully reconciling annual factor in distribution rates, subject to review and approval of the department of public utilities. The reconciliation process shall be designed so that the distribution company recovers all costs incurred under such contracts. If the RPS requirements of said section 11F of said chapter 25A should ever terminate, the obligation to continue periodic solicitations to enter into long-term contracts shall cease, but contracts already executed and approved by the department of public utilities shall remain in full force and effect.

On or before July 1, 2010, and annually until the long-term contracting requirement expires, the department of energy resources shall assess whether the long-term contracting requirements under this section reasonably support the renewable energy goals of the commonwealth under said section 11F of said chapter 25A, and whether the alternative compliance rate established under said section 11F of said chapter 25A should be adjusted accordingly.

This section shall not limit consideration of other contracts for RECs or power submitted by a distribution company for review and approval by the department of public utilities.

If this section is subject to a judicial challenge, the department of public utilities may suspend the applicability of the challenged provision during the pendency of the judicial action until final resolution of the challenge and any appeals, and shall issue such orders and take such other actions as are necessary to ensure that the provisions that are not challenged are implemented expeditiously to achieve the public purposes of this section.

SECTION 30. Section 93 of said chapter 169 is hereby amended by adding the following sentence:- In addition, the department shall expend monies from amounts collected through such alternative compliance payments for the costs associated with completing the renewable supply forecast required under section 11F¼ of chapter 25A of the General Laws; provided, however, that in the event a shortfall of renewable energy is determined under said section 11F¼ of said chapter 25A, unencumbered alternative compliance payment revenues shall be transferred to the segregated account created by the Massachusetts clean energy technology center under subsection (c½) of section 35FF of chapter 10 of the General Laws to be used in fulfillment of the requirements of said section 11F¼ of said chapter 25A.

SECTION 31. Clause (2) of section 116 of said chapter 169 is hereby amended by adding the following words:- , including hydroelectric power, regardless of whether that power is eligible under the renewable energy portfolio standard contained in section 11F of chapter 25A of the General Laws.

SECTION 32. Said chapter 169 is hereby further amended by inserting after section 116 the following section:-

SECTION 116A. The executive office of energy and environmental affairs shall report the estimated or actual ratepayer cost and benefits of any program required under this act every 3 years to the joint committee on telecommunications, utilities and energy, unless said programs are separately itemized on a ratepayer’s bill. Said reporting shall be submitted to the committee by January 31 of each reporting year. Whenever possible, the reported costs shall be presented on a volumetric basis, by customer class.

SECTION 33. The department of energy resources shall conduct a study of the greenhouse gas emissions reduction potential and viability, fiscal impact, statutory and regulatory barriers and anticipated long-term results of establishing a clean energy performance standard consistent with the greenhouse gas emission reduction requirements of chapter 21N of the General Laws, including all interim greenhouse gas limits adopted by the secretary under said chapter 21N. The study shall consider how such a clean energy performance standard could be designed so as to advance the deployment of electricity generation and storage technologies that have low or no greenhouse gas emissions and that are not eligible under sections 11F or 11F ½ of chapter 25A of the General Laws, nor eligible as part of any energy efficiency program under section 19 of chapter 25 of the General Laws. The study shall be based on the best available scientific, technical and economic analysis and specifically shall consider, but shall not be limited to, (a) market-based frameworks designed to encourage lower production of greenhouse gas emissions per megawatt-hour of electricity delivered; (b) mechanisms to make such a greenhouse gas emissions performance standard more stringent over time; (c) categories of low emissions or no emissions technologies that should be eligible under a clean energy performance standard, including but not limited to hydropower facilities having a nameplate capacity greater than 25 megawatts, large-capacity electric storage technologies, and related smart grid technologies that may enable achievement of the commonwealth’s clean energy goals; (d) mechanisms for encouraging the displacement of electricity produced by generating facilities having high emissions of greenhouse gases per megawatt-hour of electricity delivered with lower-emissions resources; (e) the extent to which various types of low emissions and no emissions technologies have reached technological maturity and the associated degree of need, or not, for incentives to encourage deployment on a commercial basis; (f) economic benefits and impacts for the commonwealth, including, but not limited to, electric ratepayer benefits and impacts as well as employment and other economic development opportunities over the short term and long term; (g) tracking mechanisms; (h) allowing tradability among suppliers, including distribution companies; (i) incentives for reducing criteria and hazardous pollutants coincident with reductions in greenhouse gas emissions; (j) eligibility criteria for electricity generation and storage technologies directed toward avoiding undue impacts on the environment or public welfare; and (k) policies adopted or considered by other jurisdictions, including other states, federal government entities or foreign nations, to advance objectives similar to those identified herein. The department shall submit a copy of the study to the clerks of the house of representatives and the senate who shall forward the copy of the study to the joint committee on telecommunications, utilities and energy by January 1, 2013.

SECTION 34. The department of public utilities shall conduct a study into the low-income electric and gas programs. The study shall identify the cost to each electric and gas distribution company of the existing program and shall include consideration of adopting a statewide low-income program to eliminate individual distribution companies from management of said programs. In addition, the study shall identify and make recommendations as to cost-saving efficiencies that increase accountability. The department shall submit a copy of the study to the clerks of the house of representatives and the senate who shall forward the copy of the study to the joint committee on telecommunications, utilities and energy by January 1, 2013.

SECTION 35. The department of energy resources shall study what legislative or regulatory steps would serve to reduce reliance on alternative compliance payments in meeting Class II renewable energy generating sources, as defined in section 11F of chapter 25A of the General Laws, and report to the joint committee on telecommunications, utilities and energy its recommendations by January 1, 2013.

SECTION 36. A customer that elects to participate in the voluntary accelerated rebate pilot program under subsection (d) of section 19 of chapter 25 of the General Laws by January 31, 2013 may aggregate rebates in amounts not to exceed 270 per cent of the amount charged to that customer for energy efficiency programs for calendar year 2012; a customer that elects to participate after January 31, 2013 but before January 31, 2014 may aggregate rebates in amounts not to exceed 180 per cent of the amount charged to that customer for energy efficiency programs for calendar year 2012.

SECTION 37. Clause Forty-fifth of section 5 of chapter 59 of the General Laws shall not apply to projects developed under section 139 of chapter 164 which have a signed agreement with the city or town to make a payment in lieu of taxes as of the effective date of this act.

SECTION 38. The department of public utilities shall adopt rules and regulations regarding the assurance of net metering eligibility under subsection (g) of section 139 of chapter 164 of the General Laws by October 1, 2012.

SECTION 39. The department of public utilities shall develop a standard interconnection agreement for projects qualifying under subsection (h) of section 139 of chapter 164 of the General Laws by January 1, 2013.

SECTION 40. The independent third-party selected under section 11F¼ of chapter 25A of the General Laws shall prepare the first forecast under said section 11F¼ of said chapter 25A not later than June 30, 2013, for the forecast period starting with calendar year 2013.

SECTION 41. The pilot program created in section 4 shall begin in calendar year 2013.

SECTION 42. The first report required under section 32 shall be completed by January 31, 2013.

SECTION 43. Section 5 shall take effect on December 31, 2015.